A coalition of nearly 500 businesses and trade associations recently called on the Trump administration to extend the 90-day duty deferral that was announced last month.
Aimed at helping preserve cash-flow for companies experiencing a “significant financial hardship” due to the COVID-19 pandemic, the temporary program gave some businesses the ability to defer certain duty and fee payments associated with imports made during March and April.
However, because many businesses were unable to take advantage of the program for various reasons, the group urged President Trump to extend the program to cover imports made during May and June, or possibly longer should importers continue to meet the economic hardship test.
As well, the group recommended that the program be expanded to include all duties and fees. Tariffs resulting from trade enforcement actions (Section 301, Section 232, etc.), along with anti-dumping and countervailing duties were excluded from deferral.
As a consequence of being announced just 48 hours before monthly remittances were due on April 21, relatively few companies were able to take full advantage of the administration’s temporary duty deferral program.
Not having enough time to get the necessary paperwork done, or in some cases being unable to adjust previously filed, but unpaid, entries to separate out trade remedy from non-trade remedy imports, resulted in many businesses losing out on significant deferral opportunities, according to the group.
Additionally, companies were prevented from recovering any duty payments made prior to April 19; leaving those already having made remittances of their duties and fees on daily statements earlier in the month, unable to benefit in a meaningful way from the program.
“More Needs to be Done”
Describing the temporary duty deferral as “an important step” to helping preserve cash-flow and providing companies with some much-needed breathing room, in an April 30 letter to Treasury Secretary Steven Mnuchin, the American Apparel & Footwear Association said that “more needs to be done.”
Taking the actions being recommended to both extend and expand the program would “immediately free up billions of dollars of working capital for American companies,” according to the AAFA and other business groups. This would allow companies to keep paying workers and manage other necessary expenses while revenues remain devastated by the effects of COVID-19 lockdown measures.
Additional Industry Recommendations
In another lobbying effort directed at lawmakers in Congress, the AAFA, along with the Council of Fashion Designers of America and the Travel Goods Association implored House and Senate leaders to provide an extended period of deferral together with the inclusion of all duties.
This would “provide some of the liquidity needed to keep more Americans employed and more American companies operational during this crisis,” said AAFA President Steve Lamar.
The three trade associations also recommended that the government:
- Temporarily suspend the collection of duties (both MFN duties and Section 301) tariffs on all items of personal protective equipment.
- Allow foreign-trade zones to temporarily remove items to off-site, non-activated, secure warehouses for 12-14 months of storage.
- Review current bond requirements so sureties can lower collateral requirements.
- Renew the Generalized System of Preferences and Caribbean Basin Trade Partnership Act, both of which are due to expire this year.
Not Everyone Agrees
U.S. steel companies and a number of other domestic manufacturers are strenuously opposed to expanding the deferral, however.
The Coalition for a Prosperous America, a protectionist lobby group headed by the former CEO of Nucor steel company and a trade adviser to the Trump campaign, wrote to the president last month urging him not to extend the deferral and thereby “reward a cheap and below-market flood of Chinese imports” — something that “only adds salt to the wounds of America’s workers,” the group said.
In their letter, Coalition Chairman Dan DiMicco implored Trump to ensure that “no further import duty deferral or forgiveness be issued as a COVID remedy.” Doing so, he warned “will increase imports and make it harder for our member companies to avoid laying off employees.”
So far, the Trump administration has not indicated whether it is inclined to grant the requests for extension and/or expansion of the deferral program
President Trump had been resistant to providing tariff relief when the deferral issue was first being debated in March. Asked at the time whether he would consider the option, Trump dismissively told reporters “there’s no reason to that” because “China is paying us billions and billions of dollars in tariffs.”*
It remains to be seen, therefore, which of the opposing business lobby groups on either side of the issue will ultimately prevail as the administration weighs the compelling economic claims and arguments made by both.
*This often-repeated claim is demonstrably untrue. In fact, as correctly noted by the Americans for Free Trade business group in their request for duty relief: “These tariffs are taxes that Americans pay.”