by Craig Brightup, The Brightup Group —
IEEPA Tariff Refunds
IEEPA tariff refunds are now being fulfilled through U.S. Customs and Border Protection’s CAPE portal system and as of May 27, CBP had cleared $20.6B in refunds. However, on May 29 the Trump Administration said it will appeal an order from U.S. Court of International Trade (CIT) Judge Richard Eaton to refund all of the IEEPA tariffs paid and not just unliquidated tariff entries.
Sec. 122 Tariffs
President Trump shifted the defunct IEEPA tariffs to 10% tariffs under Sec. 122 of the Trade Act of 1974, but on May 7 the CIT ruled that Sec. 122 doesn’t cover trade deficits. Also, the Sec. 122 tariffs are limited to 150 days (unless extended by Congress) meaning these tariffs will expire on July 24 even if the Administration wins an appeal of this decision.
Sec. 301 Investigations
The U.S. Trade Representative’s (USTR) office is racing to complete Sec. 301 investigations into 16 economies’ excess manufacturing capacity and trade surpluses in order to replace the previous IEEPA and current Sec. 122 tariffs. The targeted economies are Bangladesh, Cambodia, China, India, Indonesia, Japan, Malaysia, Mexico, Norway, Singapore, South Korea, Switzerland, Taiwan, Thailand, Vietnam, and the EU. USTR’s proposed remedies with a notice and a comment period will be forthcoming.
A second broad USTR investigation under Sec. 301 concerns 60 economies for the failure to ban “goods produced with forced labor” because such foreign producers have an “artificial cost advantage.” On June 2, USTR proposed 10% tariffs for 16 of the 60 economies that have forced labor product import laws that are loosely enforced including Canada, Ecuador, Indonesia, Mexico, Pakistan, and the EU. The other 44 countries would be levied 12.5% tariffs for failing to both impose and enforce laws prohibiting forced labor import prohibitions.
USTR will take comments on the proposed “forced labor” tariffs until July 6 and hold a hearing July 7. This timetable is undoubtedly designed to be ready to implement them when the Sec. 122 tariffs expire July 24. USTR investigations can take up to a year to generate findings, and USTR appears to have accelerated these tariffs to avoid a tariff gap that might have occurred with the Sec. 301 investigations into the 16 economies’ excess manufacturing capacity and trade surpluses.
USTR is pursuing other Sec. 301 investigations as well including one into China’s compliance with the Phase 1 agreement made in President Trump’s first term and another into China’s targeting of the semiconductor industry for dominance. Also, on May 29 USTR announced a Sec. 301 investigation of Vietnam’s practices related to intellectual property. And on June 1, USTR announced a proposed action resulting from its Sec. 301 investigation into Brazil’s trade practices resulting in a 25% tariff on imports to replace 50% duties imposed under IEEPA.
Sec. 232 Investigations
The U.S. Dept. of Commerce is also expanding its investigations under Sec. 232 of the Trade Expansion Act of 1962 which allows tariffs on goods deemed a threat to national security. The most notable Sec. 232 tariffs thus far have focused on steel, aluminum, and copper products. But Commerce is also investigating robotics and industrial machinery and personal protective equipment and medical devices, and is considering investigations into large scale batteries, cast iron, plastic piping, industrial chemicals and telecommunications equipment.
