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U.S. Chamber of Commerce Opposes Tariffs on Trade

News

U.S. Chamber of Commerce Opposes Tariffs on Trade

Randy Gosda

As we come to the final months of a year of increasingly tumultuous politics—and surprisingly strong economic growth—I wanted to provide a brief update on the Chamber’s activities on international trade and investment issues. Day in and day out, we’ve continued to insist that strong international engagement is essential to fostering good jobs and a strong economy here in the United States and around the globe.

Of course, the threat and the reality of tariffs have dominated the trade scene. The Chamber has led a whole-of-organization effort opposing the wave of tariffs imposed in the year to date.

To recap, the United States in the past few months has imposed tariffs on about $300 billion of imports of steel, aluminum, and a wide range of goods from China. Countries around the world have responded with retaliatory tariffs on approximately $150 billion of U.S. exports. The Administration has threatened to expand its tariffs further to hit an additional $250 billion of imports from China and $350 billion of auto and auto parts imports—which would invite more retaliation.

The Chamber has been outspoken on these issues for months, addressing the metals tariffs, proposed auto tariffs, and tariffs on imports from China. Imposing these tariffs on our closest allies and best customers threatens the U.S. economy, risks alienating many of our closest allies, and does not effectively address legitimate trade concerns such as those the business community has with regard to China’s industrial policies. And tariffs are, of course, a tax—one paid not by foreigners but by Americans.

We’ve been working overtime to build awareness of the costs of these actions. On July 2, we launched a new website—www.TheWrongApproach.com—presenting state-specific data on the impact of these tariffs on American workers, farmers, and consumers. This landing page has attracted 100,000 visits, making it the most viewed page on www.USChamber.com.

This new site has attracted intense attention in national media outlets and in more than 1,000 local news outlets across the country in just the first two weeks, with hundreds of additional hits each week since then. We’ve also published 30 original blog posts on the cost of tariffs—many focusing on specific states—on the U.S. Chamber’s blog Above the Fold since May 1, generating more than 50,000 views from 40,000 visitors and representing more than one-third of all content views. Our social, search, and display advertising have generated nearly 3 million impressions since mid- year, with Twitter and Facebook posts generating an additional 1 million impressions organically.

We’ve raised our serious concerns before the Administration repeatedly. We’ve also done so in scores of meetings with members of Congress. Outside the beltway, we’ve raised the issue directly in 75 in-district meetings with members of Congress, including 23 forums specifically organized on the issue. We’ve also provided briefings on the issue to 175 state and local chamber of commerce audiences, giving them the tools they need to engage with the Administration and Congress.

While the outlook is uncertain, there are glimmers of hope that the U.S. tariffs on imports of steel and aluminum from Canada and Mexico will be lifted; negotiations to this end are under way. However, the outlook on other fronts is less clear.

The U.S.-China Trade “Skirmish”

While President Trump described recent trade actions with China as “only a skirmish” in a recent interview, U.S. and Chinese officials give little indication that a significant ratcheting down of U.S.-China trade tension is imminent. White House officials have indicated that President Trump will probably meet President Xi Jinping on the sidelines of the G20 Summit in Buenos Aires at the end of November. However, officials have also downplayed the significance of the potential meeting, and President Trump has expressed his reservations about China’s readiness to respond to U.S. asks, or “make a deal.”

The Chamber agrees that there are challenges that need to be dealt with, but tariffs are the wrong approach. Instead of waging a multi-front trade war by imposing tariffs on our closest allies, we should be working with them to deal with China. Many of our allies are in broad agreement with us about China’s practices, and we should work to form a common front to confront China’s unfair industrial and trade policies.

In addition, we should better leverage the trade rules of the WTO to challenge Chinese practices. The United States was among the leaders in constructing the global rules-based trading system embodied by the WTO; we should use it as much as we can.

And we need more trade pacts like the Trans-Pacific Partnership that will raise standards in the Indo-Pacific region. By working with our partners to write the rules of trade in the region, we could create powerful incentives for China to sit up and take notice.

The New NAFTA

While the U.S.-China trade conflict continues, work has advanced closer to home. On September 30, negotiators reached agreement on the new United States-Canada- Mexico Agreement, which is the successor to the 25-year old North American Free Trade Agreement (NAFTA). The Chamber is in the process of reviewing the details of the new agreement with our members and expect to arrive at a public position in the near future.

There are elements in the deal that Chamber members are very happy about, some things that we expect to stay the same, and some areas where we still have concerns. We’re pleased a trilateral agreement was reached. As the Chamber insisted, leaving out Canada—our largest export market in the world—would have been unacceptable.

USMCA includes some of chapters that are stronger than those achieved in any previous U.S. trade agreement. Some of the best outcomes were achieved in Digital Trade, Intellectual Property, Financial Services, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Competition Policy, State-Owned Enterprises, Good Regulatory Practices, and Customs and Trade Facilitation.

The NAFTA’s positive status quo was maintained in many areas. The NAFTA eliminated all tariffs on trade between the United States and Mexico and 99% of tariffs between the United States and Canada, and this arrangement is maintained under USMCA.

However, in the judgment of Chamber members, USMCA represents a step backward from the NAFTA in a number of areas. Critically, it leaves in place the Section 232 tariffs on imports of Canadian and Mexican steel and aluminum and those countries’ retaliatory tariffs; Chamber advocacy continues on this front.

It also represents a notable step back from the NAFTA’s investment protections, including Investor-State Dispute Settlement. The agreement terminates coverage of Government Procurement in the U.S.-Canada relationship and limits it in the U.S.- Mexico relationship, and the complicated outcome on de minimis levels for low-value shipments is confusing and disappointing.

Again, we are reviewing the details of the new agreement with our members. There’ll be more to come in the weeks ahead.

More Work for the Negotiators

In hopeful news, Chamber members are following with interest the news that the United States is poised to launch formal trade talks with the EU, Japan, and the U.K. On October 16, U.S. Trade Representative Lighthizer formally notified Congress of the Administration’s intent to launch these new negotiations after a mandatory 90-day wait. Negotiations can begin with the European Union and Japan on January 14 as long as USTR publishes its negotiating objectives 30 days in advance. Negotiations with the United Kingdom must await its exit from the EU. We also expect trade negotiations with the Philippines to be announced in the coming weeks.

The Chamber welcomed the announcement. Seeking new customers in major foreign markets is critical to the success of American free enterprise, and we are committed to working with the Administration and Congress throughout the negotiations to ensure forthcoming discussions result in free and fair trade as well as adhere to the important objectives set forth in Trade Promotion Authority.

Meanwhile, as the UK’s departure from the European Union grows closer, the Chamber’s U.S.-UK Business Council continues to press both sides to find a compromise on the Irish border issue so a final deal can be ratified before March 29, 2019. Such agreement is needed to lock in place the transition period that businesses seek to minimize disruption from the split. We will lead a U.S.-UK Business Council delegation to London and Brussels in late November to underscore the need for certainty about the way forward. The Council also has submitted comments to the UK Government on priorities for a future U.S.-UK trade agreement.

Around the Globe

In recent months, the Chamber has been extremely active with programs around the world, including with many AmChams. Since President Trump took office, we’ve hosted 41 heads of state or government and more than 150 minister-rank officials from overseas, and we’ve organized more than 50 senior business delegations to foreign capitals.

In the Americas, we continue to build on work advanced by Chamber President and CEO Tom Donohue at the Summit of the Americas in Lima in March. With outstanding support from AmCham Peru and many other regional AmChams, we organized strong U.S. private sector involvement in the Americas Business Dialogue, which presented recommendations on strengthening transparency and integrity, digitizing growth, expanding trade, bolstering investment, building the energy base, and upskilling the workforce.

Elsewhere, the Chamber’s U.S.-Africa Business Center hosted heads of state from Angola, Côte D’Ivoire, Ghana, Nigeria and South Africa during the United Nations General Assembly meetings in New York in September. Of note, we awarded the 2018 Outstanding Leaders’ Award to H.E. Nana Akufo-Addo, President of Ghana, in recognition of his commitment to championing trade and investment to help grow Ghana’s economy.

In partnership with the AmChams in Ethiopia and Ghana and Kenya, the U.S. Chamber organized high-profile engagements in support of the President’s Advisory Council on Doing Business in Africa (PAC-DBIA) fact-finding mission to the continent in June and July. Through this effort, the Chamber offered recommendations on ways to strengthen commercial relations between the United States and Africa building on our U.S.-Africa policy recommendations for the Trump Administration.

We’ve also redoubled our engagement with North Africa. Beginning with an executive fact-finding mission last May, the Chamber is embarking on a robust program in 2019 to assist U.S. companies already operating in markets across the region in tackling regulatory and policy challenges and to drive greater two-way trade.

Our engagement in the Middle East and Turkey continues at a strong pace with much of the region focused on economic diversification. In September, the Chamber traveled to Saudi Arabia, Bahrain, and Qatar for meetings with heads of state, ministers, and major companies to showcase the value of U.S. goods and services. This month, we led 50 U.S. companies on a business mission to Egypt to highlight commercial partnerships and advocate for reforms.

The Chamber also supported the Middle East & North Africa AmCham Council regional forum in Amman, Jordan. In December, the Chamber will lead the first U.S. business mission to Baghdad, Iraq in more than five years, focused on rebuilding the country. With geopolitical tensions in Turkey and Saudi Arabia, the Chamber is working with companies to assess and navigate current or potential U.S. sanctions.

With Indian elections on the horizon, the Chamber’s U.S.-India Business Council is focused on developing a roadmap for reform to deliver to the new government in Delhi next year. Among our priorities are addressing impediments to growth and trade such as data localization requirements, price controls on medical devices and agricultural products, unpredictable tariffs on electronics products, and improving intellectual property rights. While trade negotiations between the two governments are ongoing, we are working hard to encourage progress and fend off a stall due to elections and waning political will.

Moving forward, we are honing our advocacy and engagement efforts to better connect with governments in both countries, industry partners, and other key stakeholders. To that end, USIBC has launched a number of crosscutting initiatives designed to provide flexible and creative dialogue on critical issues across the U.S.- India pipeline. In June, we celebrated the successful launch of the U.S.-India Connectivity Series in Los Angeles followed by a second edition held in San Jose in October – a multi-city road show designed to highlight the innovative cities and sectors driving the future of U.S.-India commercial engagement.

As you can see, the scope of the Chamber’s International Affairs program continues to expand. Our aim is to ensure that our members have a seat at the table where decisions are made about the international business environment. Please don’t hesitate to contact me or my colleagues in Washington if you have questions or if we can be of assistance.

Warmest regards.

Myron Brilliant, Executive Vice President and Head of International Affairs, U.S. Chamber of Commerce

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