Earlier this month, RV Industry Association members heard from trade expert Daniel Neumann of Sorini, Samet, & Associates on a rundown of what they could expect to see on trade in 2020. Trade issues ranged from Section 301 tariffs on China and Section 232 tariffs to the US-Mexico-Canada Free Trade Agreement, the Generalized System of Preferences and the coronavirus.
For those unable to participate, the RV Industry Association’s own trade expert, Samantha Rocci, breaks down five things you need to know:
1. WHILE THE “PHASE ONE” AGREEMENT HAS BEEN SIGNED, DON’T EXPECT A FULL CHINA DEAL THIS YEAR
If you’re waiting on a Phase Two deal, don’t hold your breath. Any Phase Two deal between the U.S. and China will likely be made in 2021, if it’s even possible to get to a deal. The Phase One agreement announced late last year covered most of the items that the two sides had flexibility on - and even getting to that agreement had a lot of drama. President Trump himself has indicated that the remaining issues that would be addressed in any Phase Two agreement are unlikely to be resolved before November’s election.
But, Phase One has brought some additional stability to China trade. It created a dispute settlement process that should bring some order to the chaos now that there is a process for both countries to follow if either feels that the other is not in compliance with the agreement. This should improve overall trade relations between the two sides. One question, however, is List 4b. You may recall that List 4b, which included basically all Chinese imports not already subject to 301 tariffs, was suspended indefinitely following the agreement.
Many feel that this list is outside of the scope of the Phase One agreement, meaning that the Trump Administration could impose tariffs on that list at any time with very short notice (like in a tweet). Make sure you’re signed up for our newsletters and alerts as we are monitoring the situation and will alert members should the Administration bring back tariffs on this list.
2. THE 232 STEEL AND ALUMINUM TARIFFS HAVE BROADENED IN SCOPE
On January 24, the Trump Administration announced it would expand 232 tariffs to “derivative” steel and aluminum products. These are products where: (1) The aluminum or steel article represents 2/3rds or more of the total cost, (2) Imports increased year-to-year from June 1, 2018 versus the preceding 2 years and (3) Import volumes of such articles following the imposition of tariffs increased more than the 4 percent average increase in the total volume during the same period since June 1, 2018.
So, what does that include? The Administration specifically cited bump and body stampings of aluminum and steel for motor vehicles and tractors, as well as steel nails, tacks, drawing pins, corrugated nails, staples and “similar derivative articles” among other items. It is likely that fasteners used in some RV construction fall within this category.
The new duties on aluminum imports don’t apply to imports from Argentina, Australia, Canada and Mexico. The new steel duties don’t apply to imports from Argentina, Australia, Brazil, Canada, Mexico and South Korea.
Lawsuits challenging the expansion have already been filed and will head to the Court of International Trade, who last year rejected similar challenges in different cases.
3. USMCA IS CLOSE TO THE FINISH LINE – EXPECT THE HEAR ABOUT MORE FTAs
The bill implementing the much-hyped US-Mexico-Canada Free Trade Agreement (USMCA) has been signed into law. Canada must now ratify the new agreement. Given the change in government structure with Canadian Prime Minister Trudeau losing seats in the last election, this could take a few weeks. Mexico has already ratified the agreement. Once Canada acts, the three countries will verify implementation before the new terms of trade can be enforced.
The Administration has already indicated its intent to move forward with other free trade agreements, including with the United Kingdom, the European Union, Kenya and Japan. What remains to be seen is to what extent USMCA will become the new model.
4. GSP IS BACK ON THE MENU
Following a tremendous victory last year with the Office of the United States Trade Representative, the RV Industry Association will work this year to get remaining Indonesian lauan plywood panels into the Generalized System of Preferences program. We successfully lobbied to get the majority of lauan plywood reintroduced to the program last year and will reengage with the process this year. We will once again run a multi-pronged strategy by not only filing our petition and testifying, but also getting Congressional support and participation from RV Industry Association members.
5. AND WHAT ABOUT CORONAVIRUS?
Coronavirus is more than just a public health issue, it’s a global economic issue. We’re just starting to see the full extent of the effects that the coronavirus outbreak will have on trade. Obviously, if you source items from China, you will likely see manufacturing slowdowns and delays. While factories typically would be reopening following the Chinese New Year, many factories are remaining closed and Chinese citizens are being kept at home. Expect to feel the effects of these extended shutdowns and for the impacts ripple throughout the global economy.
For more information or if you have questions on any of the above, please contact Samantha Rocci at [email protected].