Experts: Food Tariff Exemptions Just the Beginning

Wendy Cutler, a former career employee at the U.S. Trade Representative and now vice president of the Asia Society Policy Institute, said on a Washington International Trade Association podcast last week, "Look, it clearly underscores the domestic pressure that the administration is under and the growing unpopularity of these tariffs, as they are linked directly to increased prices in the supermarkets and elsewhere. So, I think this is just the beginning. I think we're going to see many more product exceptions and exclusions going forward."

She said the president will keep boasting about the high tariffs, "but when you actually look at the application, the tariffs are actually applied to a smaller and smaller subset of goods."

Mark Linscott, former assistant USTR for South and Central Asia, now a senior fellow at the Atlantic Council, agreed.

Moderator Joseph Damond, chair of International Trade Policy and Global Life Sciences at Crowell Global Advisors, said that there's "a mini feeding frenzy going on around town of private sector groups who want to get some item exempted because it's not produced or not sufficiently supplied from U.S. sources. But there's no formal process. This is all going on behind the scenes."

Damond said it's not a good way to provide exemptions, because "people who might be on the other side of these issues are not being given the chance to comment."

He said people also aren't sure how to get the exemption, except they think they have to "talk to the right person at a very high level in one of these government agencies, maybe even in the White House, to do that."

The panel also talked about the commerce secretary and trade representative traveling to the EU for talks, and the recent agreement to lower tariffs on Swiss goods from 39% to 15% (see 2511140051).

The 39% tariffs haven't been lowered to 15% yet, and former Assistant USTR for Europe Dan Mullaney said no timetable was laid out, but that he expects it could be within a month, like it was with the EU. Mullaney, now a senior fellow at the Atlantic Council, said the deal was similar to what was teed up months ago but fell apart because the U.S. had the incorrect sense "that somehow the Swiss weren't sensitive to the priorities of the administration" to lower trade deficits.

He said, "Then there was just a really bad call at senior levels, and that was pretty much that."

He said Swiss executives smoothed things over. He said the announcement really spelled out a number of non-tariff barriers the U.S. expects Switzerland to rectify. He said it has a lot more detail than in U.K. and EU frameworks, even though many of the NTBs are the same.

However, the terms aren't yet settled, as they were in Malaysia; the White House fact sheet says discussions will conclude early next year.

Mullaney said he believes the trip to Brussels was in part because the U.S. is getting nervous about how long the legislative process is taking for the EU to lower its tariffs on U.S. industrial exports. There have been many "public statements from the Parliament about the need for amendments, and additions and conditions and caveats and things. I think that's making the administration a bit nervous ... is the EU really on track even for the relatively simple, concrete and straightforward tariff part of this?"

He said he's concerned somebody in Washington in December may ask: What has Europe done to fix its unfair trade practices? And they may conclude nothing.

"It could be a time bomb in these negotiations," he said.

He said the administration has "been holding its fire" on pharmaceutical and semiconductor Section 232 actions, and "if discussions go off the rails in terms of either the tariff commitments or in terms of doing something meaningful on these NTBs, I do have a sense that the administration could pull the trigger on significant other tariffs."

Cutler said there may be other constraints on hiking tariffs on chips and products that contain chips, however. She said any action could trigger retaliation from China. "This truce is so fragile that any measure the U.S. takes, even if it's not directed at China, if it impacts China, we could be opening up that can of worms," she said. And, she said, "The administration very much seems to want to keep this truce in place."