The U.S. Chamber of Commerce, in an updated list of its priorities for a U.S.-United Kingdom free trade agreement, said it wants a “single, comprehensive agreement,” not a phased approach that resolves just “a subset of issues.” The Chamber released its list the same day negotiations began (see 2005050014) May 5. It wants the U.S. and the U.K. to eliminate all tariffs on industrial goods, to address non-tariff barriers in industrial goods, and for the U.K. to end what the Chamber calls “non-science-based restrictions on agricultural trade.” The Chamber also is calling for the administration to promptly remove Section 232 tariffs on British steel and aluminum.
iRobot expects about $57 million in refunds of the List 3 Section 301 tariffs it has paid since the duties took effect in September 2018, including $6.6 million paid in Q1, Chief Financial Officer Alison Dean said on an April 29 Q1 investor call. The Office of the U.S. Trade Representative granted iRobot a tariff exclusion last week on the robotic vacuums it imports from China (see 2004240031). The refunds are expected in several installments this year, Dean said. The exclusion expires Aug. 7.
Brazilian and U.S. business organizations are asking their two countries to reach a trade deal in 2020, “with priority on modernizing trade and customs, establishing good regulatory practices, creating rules for digital trade, and combating corruption,” they said in a letter sent last week and released to the public on April 27. “These trade disciplines can be achieved without requiring either U.S. legislation or Mercosur’s involvement, and they would substantially reduce unnecessary costs and enhance bilateral trade and investment,” they said. Brazil is in a customs union known as Mercosur, or South American Common Market, and thus cannot lower its tariffs without other countries' consent.
The Office of the U.S. Trade Representative granted iRobot an exclusion to the List 3 Section 301 tariffs on the robotic vacuum cleaners it imports from China under Harmonized Tariff Schedule subheading 8508.11.00.00. iRobot applied for the exemption July 1 and based its argument partly on plans to shift production to Malaysia from China. It began producing entry-level vacuums in Malaysia in November, and said it will source additional models there later in 2020. The exclusion is retroactive to Sept. 24, 2018, when the List 3 tariffs took effect at 10%, and is valid through Aug. 7, 2020. The Trump administration hiked List 3 tariffs to 25% on March 2, 2019. iRobot’s was one of 107 exemptions granted for “specially prepared product descriptions” covering 157 “separate exclusion requests,” USTR said (see 2004230010). iRobot is “pleased that the USTR determined that our rationale for an exclusion was appropriate, particularly in light of the tangible steps we have taken to establish our manufacturing activities in Malaysia,” CEO Colin Angle said in an email. “As the largest American pure-play robotics company, with over 800 U.S.-based employees and roughly half of our revenue generated domestically, we believe that an exclusion not only further supports iRobot's ability to maintain its technological and category leadership but it also helps ensure that robotics is an industry in which the U.S. continues to lead the world.”
Industry is finding it can move components out of China, and it's still affordable to produce those components closer to final assembly plants, especially with more automation, said Peter Anderson, vice president of global supply chain at Cummins, an Indiana-based Fortune 500 company that makes engines for heavy equipment and heavy-duty trucks. The sections 301 and 232 tariffs made Cummins start “to think about what we could do differently,” and he said many Cummins suppliers have “started to take things out of China to mitigate those tariffs.” Anderson was one of several voices on a webinar on how manufacturing will change after the COVID-19 pandemic response, hosted by the Hudson Institute on April 22.
The National Association of Manufacturers is arguing that Section 301 tariffs should be lowered or at least suspended “to spur economic growth and job creation,” and, where Section 301 refunds were already due, accelerate the process. Speeding up tariff refunds and duty drawback payments would allow companies “to rehire and reinvest as soon as possible,” the trade group said.
American apparel, accessories, sporting goods and footwear importers, along with their partners around the globe, are asking all countries to defer duties for at least 180 days, and “[w]here appropriate, such as in the case of items of personal protective equipment or items used by lower income consumers, government should also suspend duties.” The request is in a letter, penned April 22 and signed by 65 organizations in Europe, Asia, the Middle East and North America that either produce apparel or import and sell it.
Importers hailed the temporary duty deferral announced April 19 (see 2004200024), even as many said applying it to Section 301 is also needed. Apparel faces some of the highest Most Favored Nation tariffs, which are the only category the duty deferral applies to. American Apparel and Footwear Association CEO Steve Lamar said: “Deferring duty payments and import fees in a time of limited liquidity is a welcome move. As revenue has receded due to closed stores and less commerce, American companies have been faced with the difficult decision to pay their tariff bill to the U.S. government or keep American workers on payroll. The deferral of these payments will provide some of the liquidity needed to keep more Americans employed and more American companies operational during this crisis,” He said, however, that Section 301 duties should be included.
C.H. Robinson Worldwide will temporarily reduce the salaries of its executives and payments to board members, it said in an April 17 Securities and Exchange Commission filing. From May 1 through July 31, “base salary payments will be reduced by 50% for the Company’s chief executive officer and 20% for the other executive officers,” it said. “Base cash retainer payments for the applicable period for the members of the Board will be reduced by 50%.”
The Council on Foreign Relations said that U.S., European and Japanese pushback over Made in China 2025, at least the part on high performance medical devices, may ebb after the coronavirus pandemic has passed -- because other countries will want to implement their own versions. “If any country knows a little bit about reducing industrial dependence on the rest of the world through conscious industrial choices, that would be China,” said Brad Stetser, a CFR senior fellow for international economics, during a webinar April 16. He said China is displacing imported semiconductors, but has been less successful in displacing imported aircraft.