Protracted China tariff review irks industry

A coalition of more than 160 business associations is calling on the Biden administration to wrap up its review into whether to change tariffs on more than $300 billion worth of Chinese goods as the investigation spills into 2024.

— The chair of the European Parliament’s Committee on International Trade said the U.S. kept its side of the bargain after the Biden administration announced its decision to extend the U.S. side of a steel and aluminum trade peace deal.

Chair Mike Gallagher defended the House Select Committee on China’s aggressive approach to Beijing in an interview as the committee struggles to translate a yearlong communications campaign into viable legislation.

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TARIFF REVIEW STRETCHES INTO 2024: Major industry associations are piling pressure on the Biden administration to release the results of its review over whether to change Trump-era tariffs on Chinese goods as the Office of the U.S. Trade Representative falls behind expectations it would wrap up the investigation before the start of the new year.

What’s frustrating industry: It’s becoming unclear when (or even if) USTR will reveal its proposed changes to Section 301 tariffs imposed during the Trump administration. That’s despite USTR Katherine Tai previously telling lawmakers she expected the review would be completed by fall of 2023, a year ahead of the 2024 presidential election.

“We are disappointed that USTR continues to drag out this review despite receiving hundreds of comments from businesses large and small who have been negatively impacted by the tariffs. It is imperative that USTR announce the results of the review promptly,” said the broad-based Americans for Free Trade, which represents more than 160 U.S. business associations and millions of U.S. workers.

The coalition — which includes the National Foreign Trade Council and the United States Council for International Business — delivered the rebuke in a statement responding to a decision from USTR to extend tariff exclusions for another five months on 77 medical goods and 352 non-medical products that were scheduled to expire on Dec. 31.

“These exclusions are needed to provide economic relief for American businesses, especially during a time of unprecedented disruptions to global supply chains,” AFT wrote, praising the extension, but underscoring frustration that “USTR announced this short-term extension with little notice, making it difficult for businesses to plan.”

USTR also said it would open a new public comment period beginning Jan. 22 to help it decide the fate of individual exclusions that might be extended.

Election in the fray: The temporary exclusions come ahead of this year’s presidential election, which has underscored growing uncertainty about whether the Biden administration would propose reducing any Section 301 tariffs and risk being called “soft on China” by Trump or some of his Republican allies in Congress. That is adding to the expectation that results of the 301 review won’t be released publicly until later in 2024, if at all.

Industry groups, for their part, broadly reject the tariffs. AFT wrote to congressional leaders on Dec. 20 asking them to exercise more control over trade policy to support the coalition’s goals, and put pressure on USTR to finally wrap up its protracted review.

Stephen Lamar, president and CEO of the American Apparel & Footwear Association, which represents more than 1,000 name brands, questioned the decision to launch a new comment process while a review is underway.

“Why is it opening up a new comment process on these exclusions and why has it so far declined to announce the results of the four-year review, which is itself way overdue and which already included the current exclusions in its scope? During a time of persistent inflation we should be looking for ways to reduce tariff burdens,” Lamar said in a statement.

MORE TARIFF TURBULENCE: Biden last week also announced the administration is extending the U.S. side of a steel and aluminum trade peace deal with the European Union for two years as the partners failed to negotiate a permanent resolution to the dispute in 2023.

That means European tariffs on American products such as whiskey and motorbikes will be paused until the end of March 2025, shortly after the winner of the 2024 presidential contest takes office. The temporary relief falls short of expectations the transatlantic partners would reach a permanent solution.

EU response: “The #USA today kept their part of the promise to extend the existing ceasefire of limited tariff exemption for steel + aluminum imports. That’s a good thing, but exporters who export more than the allocated quota still have to pay very high tariffs. Not fair,” Bernd Lange, chair of the European Parliament’s Committee on International Trade, wrote on X responding to the announcement.

Reminder: U.S. trade negotiators agreed two years ago to replace the 25 percent tariff that Trump placed on European steel with a TRQ that allowed 3.3 million metric tons to come in each year duty-free. A similar arrangement allowed the EU to export 366,040 metric tons of semi-finished wrought aluminum and 18,000 metric tons of unwrought aluminum to the United States each year on a duty-free basis before Trump’s 10 percent tariff was imposed.

XI, BIDEN CELEBRATE 45 YEARS OF TIES: Chinese leader Xi Jinping told Joe Biden that the world’s largest economies should strive to improve communication and mitigate the risk of competition spilling into conflict in a letter commemorating the establishment of diplomatic relations between the countries on Jan. 1, 1979.

The letter said since that date, which was also when Washington ended its formal diplomatic relationship with Taipei, cooperation between China and the U.S. have “not only improved the well-being of people from both countries, but also contributed to global peace, stability and prosperity.”

Joe Biden also sent Xi a letter to mark the 45-year milestone, Chinese media reported.

GALLAGHER ON THE ‘NEW COLD WAR’: The House Select Committee on China’s aggressive approach to tackling relations with the rival superpower faces a big test this year: whether it can turn its policy proposals into law, Phelim Kine reports.

Mike Gallagher, the Wisconsin Republican who chairs the panel, says he is aiming for “a big China bill” in 2024, one that will wrap in all the recommendations and “actually get a vote on the House floor.”

“There are certain things that require a machete, so one must use both in order to successfully prevent a war with China in the near term, prevent China from controlling the commanding heights of critical technology in the midterm, and win this new Cold War over the long term,” Gallagher told POLITICO in an interview.

Gallagher says China’s normal trade status shouldn’t be sacrosanct and “the right sort of revocation” could be a way “to force China to abide by its WTO commitments.” He notes that there are both GOP and Democratic members “uncomfortable” with that strategy, but doesn’t view that dimension as a barrier to finding a compromise.

Keep in mind: The committee’s attack-dog efforts have turned off some Democrats and experts who warn about overstating Beijing’s threat level or getting too protectionist. Former U.S. Ambassador to China Max Baucus added that the group “seems to be more anti-China than it is honest-to-goodness constructive” when it comes to dealing with the relationship.

RIP BIDEN’S WORKER-CENTERED TRADE: President Joe Biden’s ambitious plans to rewrite the rules of global trade — and blunt Donald Trump’s economic message against him — are running aground just as the nation enters election season.

The chief reason: Biden has failed to sell his self-styled “worker-centered” trade policy to key members of his own party, stoking fears of a backlash at the ballot box from the very workers the president and fellow Democrats are courting.

Gavin has more here.

ARGENTINA REJECTS BRICS IN POLICY REVERSAL: Argentina’s far-right president Javier Milei sent a letter to the leaders of Brazil, Russia, India, China and South Africa countries to officially withdraw his country from its planned entry into the BRICS coalition of emerging nations.

On Monday, Saudi Arabia, Iran, the United Arab Emirates, Ethiopia and Egypt officially joined BRICS. The expanded group comprises around 28 percent of the global economy and produces around 44 percent of the world’s crude oil. All six countries received invitations to join the coalition, according to South African President Cyril Ramaphosa.

But Milei, the self-proclaimed anarcho-capitalist, said the moment was not “opportune” for Argentina, according to the letter, released last week by the Argentine government.

Milei, who rose to popularity on a wave of anger as the economy nosedived, signaled during his campaign that he would shift the country’s trade away from China and Brazil and bring Argentina closer to the West, particularly the United States and Israel.

— The Federal Circuit Court of Appeals allowed Apple to continue selling two of the tech company’s smartwatch lines involved in a patent infringement case brought by a rival, Doug reports.

— The U.S. Navy destroyed three boats carrying Houthi rebels in the Red Sea on Sunday after fighters attempted to board a container ship in the second attack against the vessel this weekend, per Victor Jack.

— China and Nicaragua formally started trading under a new free trade agreement on Monday, per Reuters.

No events on the calendar. Take some time for yourself this Tuesday.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: [email protected], [email protected] and [email protected]. Follow us @POLITICOPro and @Morning_Trade.

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