The Washington Tax and Public Policy Group opened a new division to focus on trade issues, the lobbying firm said in a news release. The new division, WTG Global, is led by Brian Diffell, who joined the firm in 2013 after working as a congressional staffer. Among issues WTG Global will work on are Section 232 tariffs on steel and aluminum, Section 301 tariffs and NAFTA, it said.
The Trump administration’s proposed Section 301 tariffs on a third tranche of Chinese goods worth about $200 billion in customs value “would target many key components that make cloud computing possible,” the Information Technology and Innovation Foundation reported on Sept. 4. The administration “in theory” initiated the tariffs to “counteract unfair Chinese trade practices and improve U.S. competitiveness,” ITIF said. “But their practical effect would be to advantage foreign technology competitors, thereby threatening U.S. leadership in both the adoption and provision of cloud computing, and stunting U.S. economic growth,” it said. Though “contesting Chinese innovation mercantilism” is a “laudable and necessary mission,” the administration needs to “seek alternative policy measures that do not raise the cost of key productivity -- and innovation-enhancing capital goods and services such as information technology and cloud computing,” it said. ITIF fears that tariffs would raise prices for businesses and consumers and force cloud-service providers to cut costs through job reductions or curtail spending on new data centers or the research and development “needed to stay ahead of international competitors,” it said. It also worries that cloud providers “may be forced to invest elsewhere to remain competitive,” it said. Tariffs also “threaten to disrupt finely crafted global supply chains for the manufacture of information-technology products,” it said. Those supply chains can’t “easily be reinvented in the short term without significant detriment to, and dislocation of, U.S. industry,” it said.
Though the Trump administration “so far” hasn’t targeted “fashion watches” for Section 301 tariffs on Chinese imports, “that could be a potential for the future,” Movado Group CEO Efraim Grinberg said on an Aug. 29 earnings call. “We are looking at different ways to hope to be able to mitigate that, if that were to occur,” he said. “In the short-to-medium term, if they were to occur, that would be a threat to the overall margins.”
The increase to the de minimis value threshold in Mexico as part of the U.S.-Mexico trade deal (see 1808270032) is good news for small companies, eBay said in a news release. "This allows low-value shipments to cross borders with minimum effort, allowing for stronger global trade" and "the eBay Government Relations team has long advocated that countries raise their de minimis thresholds to promote trade," it said. The trade deal would double Mexico's de minimis to $100, though it is still well below the U.S. de minimis of $800. "This decision is a positive step forward for promoting trade and economic opportunities for small businesses," eBay said.
Seafood importers should make certain that Chapter 98 exemptions for goods returned to the U.S. after being advanced in value are applicable when filing such claims to reduce exposure to Section 301 duties, a lawyer at a seafood company said during a recent interview with Seafood Source. Ian Moores, general counsel at seafood company F.W. Bryce in Massachusetts, said that the duty exceptions in Harmonized Tariff Schedule subheading 9802.00.50 for goods returned after repair or alteration only apply to U.S. raw fish material processed in China. Additionally, CBP has ruled that headed and gutted raw material that is cut, frozen and packaged goes beyond "alteration," Moore said. The Office of the U.S. Trade Representative recently said the Section 301 tariffs will only be applied to the operation performed in China, not the full value of the good, for imports under the Chapter 98 provisions (see 1808160049). Seafood is not currently subject to Section 301 tariffs, but is on the list of $200 billion of goods proposed for the third round of duties (see 1807100070).
Remaining risks that could derail the momentum toward replacing NAFTA include legislative uncertainty and Canadian inflexibility, said Carlos Capistran, Canada and Mexico economist at Merrill Lynch, in an Aug. 28 research report. There's a possibility that an insistence on a trilateral deal in the U.S. Congress or that a Democratic takeover in the House could prevent approval, Capistran said. "There is also a risk that the Mexican Congress does not approve the deal, for instance on the grounds that the energy sector is too open, but we see this as a low risk given the participation" of the incoming Mexican president's team in the negotiations.
An extension of brand name biologic data protections to 10 years "will harm patients who seek more affordable medicines," the Association for Accessible Medicines, the Canadian Generic Pharmaceutical Association, and the Mexican Association of Generic Medicines said in a joint statement. "The U.S., Mexico and Canada should reject these provisions, which would benefit brand name drug companies to the detriment of public health and the affordability of medical care," the groups said. The extended protections are part of the deal's intellectual property chapter, the Office of the U.S. Trade Representative said in a fact sheet.
Best Buy CEO Hubert Joly said tariffs could lead to price hikes for consumers, during an Aug. 28 earnings call after reporting results for the company's Q2 ended Aug. 4 that was accompanied by a stock decline. “When there’s a price increase, there’s an impact,” he said, though the Trump administration has “very important international trade goals.” Effects from tariffs will be “tightly linked” to gross profit margins, Joly said. A 25 percent tariff on an item with a gross profit of 20 percent will result in a 20 percent price increase, the executive said. He mentioned vendors’ ability to absorb tariffs and over time to diversify their supply bases. The retailer's Q2 online sales growth slowed to 10 percent following 31 percent sales growth in the year-ago quarter over the prior-year quarter, said Chief Financial Officer Corie Barry, underscoring the retailer’s “mature” position in e-commerce. It's gaining market share online, Barry said, now at 15 percent of domestic revenue.
Imports at the major U.S. retail container ports set record highs in June and July and appear poised to set a third in August, the National Retail Federation said in an Aug. 9 news release. It’s all the result of retail sales rising and retailers “rushing to bring merchandise into the country” ahead of the proposed Section 301 tariffs on $200 billion worth of products from China, NRF said. “Tariffs on most consumer products have yet to take effect but retailers appear to be getting prepared before that can happen,” said Jonathan Gold, NRF vice president-supply chain and customs policy. “We’re seeing new record levels every month this summer. Much of that is to meet consumer demand as tax reform and a thriving economy drive retail sales, but part of it seems to be concern over what’s to come. The good news for consumers is that avoiding tariffs holds off price increases that will inevitably come if the reckless and misguided trade war is allowed to continue.” U.S. ports handled 1.85 million 20-foot-long cargo containers or their equivalents in June, a 7.8 percent increase from the same month a year earlier, NRF said, citing its own Global Port Tracker report. It estimates ports handled 1.88 million containers in July, a 4.4 percent increase year-over-year, and forecasts August container imports will be up 4.4 percent to 1.91 million, it said. “The volatility and non-fact-based decisions coming from Washington have created uncertainty" in the retail sector, said Hackett Associates, the contractor that compiled the port-tracking statistics for NRF.
WiseTech Global acquired Taric, a customs management solutions company in Spain, WiseTech said in a news release. “Strengthening our presence across manufactured global trade routes is a central part of our growth strategy and Spain is a key European market for us, said WiseTech CEO Richard White. "In joining the WiseTech Global family, the powerhouse Taric team bring[s] Spanish customs capability, and tariff and regulatory expertise across Europe where its customs classification services have been widely used." Terms of the deal weren't released.