In early February, trade expert Daniel Neumann of Sorini, Samet & Associates provided RVIA members an overview of what to expect with trade in 2020. Issues included:
• Section 301 tariffs on China.
• Section 232 tariffs to the US-Mexico-Canada Free Trade Agreement.
• The Generalized System of Preferences and the coronavirus.
Here are five things RVIA’s Samantha Rocci says industry veterans need to know:
1. Phase One Deal is Signed, But Full China Deal Not Expect in 2020
A Phase Two deal between China and the U.S. is unlikely to occur until 2021, if it happens at all. The Phase One agreement announced late last year covered most items the two sides had flexibility on. The White House says remaining issues and a Phase Two agreement are unlikely to happen before November’s election.
Phase One has brought some stability to China trade. It created a dispute settlement process that should streamline the process should either party feel the other is not in compliance. This should improve overall trade relations between the U.S. and China moving forward. One lingering question is List 4b. This list includes essentially all Chinese imports not already subject to 301 tariffs. This list was suspended indefinitely following the Phase One agreement.
Some feel the 4b list is outside the scope of the Phase One agreement, meaning that the Administration could impose tariffs on that list at any time with very short notice. The RVIA encourages its members to sign up for its newsletters and alerts. They are monitoring the situation and will alert members should the Administration bring back tariffs on this list.
2. The 232 Steel/Aluminum Tariffs Have Been Expanded
On January 24, the Administration announced it would expand 232 tariffs to “derivative” steel and aluminum products. These are products in which:
• The aluminum or steel article represents 2/3 or more of the total cost.
• Imports increased year-to-year from June 1, 2018 versus the preceding two years.
• Import volumes of such articles following the imposition of tariffs increased more than the 4 percent average increase in the total volume during the same period since June 1, 2018.
Included are bump and body stampings of aluminum and steel for motor vehicles and tractors, as well as steel nails, tacks, drawing pins, corrugated nails, staples and “similar derivative articles” among other items. It is likely that fasteners used in some RV construction fall within this category.
New duties on aluminum imports do not apply to imports from Argentina, Australia, Canada and Mexico. New steel duties do not apply to imports from Argentina, Australia, Brazil, Canada, Mexico and South Korea.
Lawsuits challenging the expansion have already been filed and will head to the Court of International Trade, who last year rejected similar challenges in different cases.
3. USMCA Is Close to Being Finalized
The bill implementing the much-hyped US-Mexico-Canada Free Trade Agreement (USMCA) has been signed into law. Canada must now ratify the new agreement. Given the change in government structure with Canadian Prime Minister Trudeau losing seats in the last election, this could take a few weeks. Mexico has already ratified the agreement. Once Canada acts, the three countries will verify implementation before the new terms of trade can be enforced.
The Administration intends to move forward with other free trade agreements. These include agreements it hopes to solidify with the United Kingdom, the European Union, Kenya and Japan. It is uncertain if the USMCA will be a model for additional agreements.
4. Lauan is Back in GSP
Following a victory last year with the Office of the United States Trade Representative (USTR), the RVIA will work this year to get remaining Indonesian lauan plywood panels into the Generalized System of Preferences (GSP) program. The association successfully lobbied to get the majority of lauan plywood reintroduced to the program last year. The process will be re-engaged this year. The RVIA will again take a multi-pronged approach by filing a petition and testifying, and seeking support from Congress and RVIA members.
5. Coronavirus Implications
Coronavirus is a global economic issue. The U.S. is just beginning to see the effects the coronavirus outbreak will have on trade. If your company sources items from China, manufacturing slowdowns and delays are likely. Many factories remain closed and Chinese citizens are being kept at home. The effects of extended shutdowns and are expected to ripple through the global economy.
For more information or if you have questions on any of the above, please contact Samantha Rocci at [email protected].
