“The section 301 tariffs really didn’t [get] to the root of the problem, which is China’s unfair labor practices. Instead, much like the steel tariffs, [section 301] tariffs are attacks on manufacturing. Instead of taxing the bad actors, it’s a tax on manufacturing here in the U.S.”
— Charlie Souhrada Vice President of Regulatory and Technical Affairs North American Association of Food Equipment Manufacturers (NAFEM)
Te USTIC Opens an Investigation
All told, the United States placed tariffs on nearly $400 billion of imported goods between 2018 and 2019. Aside from several exclusions or “waivers” that were put in place, both the Section 301 and Section 232 tariffs have remained intact for the last four years. In March, the Biden administration reinstated 352 product exclusions for the section 301 tariffs and reinstated those product exclusions retroactively. In May, the USTIC launched a fact-finding mission to determine the economic impact of the tariffs on U.S. industries. Directed to conduct this investigation as part of the Omnibus Appropriations Act, the USITC plans to provide “detailed information on U.S. trade, production, and prices in the industries directly and most affected by these tariffs.” The USITC probably didn’t have to look too far to see the negative impacts of these wide-sweeping duties on key imports. As far back as 2020, the Congressional Budget Office (CBO) was already reporting that tariffs reduced Americans’ average real household income by $1,277. At the time, the CBO expected the effect
12 FEDA News & Views
of trade barriers on output and prices to “diminish over time as businesses continue to adjust their supply chains in response to the changes in the international trading environment,” and that by 2030, the tariffs would lower the level of real gross domestic product (GDP) by 0.1 percent.
An advocate for eliminating the Section 301 and 232 tariffs, John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce, said they’re basically taxes that are paid by Americans and “equivalent to one of the largest tax increases in decades.” To date, the duties are all “pretty much still in place and taking a toll on Americans’ wallets,” he adds. “There’s a lot of research to confirm this,” Murphy said, pointing to a Federal Reserve study that found that the tariffs are “almost entirely borne by U.S. firms and consumers.” The recurring $1,277 burden that consumers are shouldering every year alone – a number that may have increased since 2020 – translates into significant costs. “We’re talking about big dollars here,” Murphy said. “Even if the actual price of the tariffs is obscured when a company buys materials or a shopper pays for groceries, the duties are still there.”
Letting the Public Have its Say As part of its investigation, the USITC
held a public hearing about the Section 301 and 232 tariffs in July. The hearing took place virtually and was well attended by many different companies and trade associations, according to Murphy, many of which spoke up about how the tariffs are “punishing” U.S. businesses and consumers. Charlie Souhrada, vice president of
regulatory and technical affairs for the North American Association of Food Equipment Manufacturers (NAFEM), has also been actively advocating for the removal of the tariffs. A recent NAFEM survey revealed that 85 percent of its members feel that tariffs are “impacting their ability to control costs,” with 60 percent stating the Section 232 and 301 tariffs are “causing severe economic harm to their companies.”
Souhrada said the intentions behind the hearing were good, but he’s not sure whether it will result in any positive actions regarding the tariffs. “It was a virtual hearing that required a fair amount of choreography on the part of the ITC’s staff, which did a terrific job of ensuring that everyone was heard,” Souhrada recalled. “Still, it’s hard to believe that anything will happen when the final report is issued in March.” Souhrada is referring to the USITC’s
final report on the impact of the Section 232 and 301 tariffs, which is expected to be published on March 15, 2023. Ideally, he said NAFEM would like to see the duties removed, but failing that it would like a transparent process to be put in place that “all NAFEM members can actually participate in.” For example, while manufacturers are allowed to file exclusions for the Section 232 steel tariffs, distributors of the related goods cannot file for these waivers.
“The importer of record is typically a service center that functions like a steel dealer in many ways, so they don’t have
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