A recent report from the Congressional Research Service noted that even as some countries place export restrictions on supplies needed to fight the COVID-19 pandemic, the president could remove tariffs on medical supplies under Section 318 of the Tariff Act of 1930. The CRS noted the legality of this section has never been tested, but given that so far, federal courts have upheld the constitutionality of Section 232, it could be that the president could have such broad power to remove tariffs, as well.
The Senate Finance Committee chairman, joined by 11 other Senate Republicans, is asking President Donald Trump to consider a total moratorium on new or raised tariffs, as well as examining how tariffs and import and export restrictions specific to medical supplies can be tackled. They praised the Office of the U.S. Trade Representative for excluding some medical supplies from Section 301 tariffs since the novel coronavirus COVID-19 pandemic spread to the U.S., but said a wider review should be done to make sure none remain. And they encouraged him to coordinate with other countries that have imposed export restrictions in response to COVID-19, so that there aren't cost increases and “critical supply shortages.”
While they are pleased that the Office of the U.S. Trade Representative is seeking information about how Section 301 tariffs are hindering the fight against the spread of COVID-19, three pro-trade Democrats told USTR Robert Lighthizer that “this move alone is not enough to stop the harm that is being done to our health care system and economy. We request that you temporarily suspend tariffs or at least greatly expedite and simplify the tariff exclusion process during this difficult time. Immediate tariff relief will have numerous positive effects, including reducing disruptions to existing supply chains and easing the economic burden on our companies and their workers.”
The coronavirus bill pending in Congress includes a provision that could help importers that have been unprofitable after the imposition of Section 301 or Section 232 tariffs. According to draft text of the CARES Act (Coronavirus Aid, Relief and Economic Security Act), companies can use the losses they incurred in 2018, 2019 or 2020 to get income tax refunds from the previous five years. They could apply now for those 2018 and 2019 losses.
More than 75 members of the House, both Republicans and Democrats, are asking the Defense Logistics Agency and the Office of the U.S. Trade Representative not to restrict purchase of personal protective equipment -- such as N95 masks, also called respirators, gloves, gowns, and shoe covers -- to U.S. sources. They say that importing is critical to stop the shortages.
The Cheese Importers Association of America is asking that shops and importers lobby their congressional representatives and ask that the tariffs paid on European cheeses in retaliation for Airbus subsidies be refunded, and that they be lifted for the rest of the year. The tariffs “will only serve to weaken the ability of restaurants, specialty food stores, food importers and distributors to make payroll and for American families to afford food and other essential items,” the organization said. While the organization is asking this be part of the COVID-19 stimulus package, it's not clear Congress has the authority to rescind the tariffs, which were levied under Section 301 by the Office of the U.S. Trade Representative.
The National Customs Brokers & Forwarders Association of America is asking members to send letters to their congressional representatives to ask for them to include a change to bankruptcy law in a stimulus package responding to the economic crisis caused by the COVID-19 pandemic. They are asking Congress to include H.R. 2261, the Customs Business Fairness Act, so that when importers go bankrupt, the customs duties they reimbursed brokers for aren't part of 90-day claw-back provisions under bankruptcy law. “We believe that many importers may find the need to file bankruptcy due to the issues surrounding the COVID-19 crisis and the disruption to businesses it has caused,” the trade group said.
Sen. Tom Cotton, R-Ark., and Rep. Mike Gallagher, R-Wis., said they will introduce a bill that aims to push China out of the pharmaceutical supply chain, though it would not take effect until 2022. It would bar the Veterans Administration, the Pentagon and the Department of Health and Human Services from buying drugs that are either manufactured in China or have their active pharmaceutical ingredients made in China. If it becomes law, it would also require drug companies to list the APIs and their countries of origin on the labels of drugs, whether imported or domestic. “This is a national security imperative that to many Americans, is a matter of life and death,” Gallagher said. “It's past time for us to develop an aggressive plan to move critical pharmaceutical supply chains away from China.”
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said the export restrictions on masks, respirators, medicines and other goods needed for responding to the COVID-19 pandemic is “a bad cycle,” and he urged the president and world leaders “to work together on a coordinated response on the epidemic.” Grassley, who was speaking with reporters on a conference call March 16, said restrictions reduce global supply and lead to higher prices. “I was encouraged to see the G7 leaders' statement today,” he said, which mentioned support for global trade.
Witnesses at the Senate Small Business Committee hearing on the coronavirus pandemic said that small businesses are going to suffer as people stop traveling, shop less in person and go out to eat less as part of a social distancing strategy necessary to slow the spread of the virus. Sen. Ben Cardin, D-Md., the top Democrat on the committee, said in his opening statement that he's heard from a small jewelry company that has interruptions in its Chinese supply chain and is getting demands from distributors to pay up front, because they don't trust that retail sales will happen to pay them back.