Trade, Tariffs and Trouble: Get Ready

Posted by: Dan Ujczo - Dickinson Wright on Friday, June 15, 2018

Dickinson Wright Law Firm advises that we are entering the “Summer of Disruption” to global trade based on five (5) recent US actions and other countries’ responses:

  1. China The US announced on Friday the imposition of 25% tariffs on approximately $33.8 billion of China-sourced goods pursuant to Section 301 (effective July 6); China immediately announced retaliatory tariffs (effective July 6); the US launched investigations into nearly 300 other tariff classifications from China (totaling an additional $14.6 billion); and President Trump threatened, another set of US tariff threats on up to $100 billion of China sourced goods should China actually retaliate.
  2. Steel and Aluminum Tariffs Retaliatory tariffs were imposed or announced on US goods by Mexico (June 6), the EU (July), and Canada (July 1) relating to Section 232 steel and aluminum tariffs, with no resolution in sight.
  3. NAFTA The NAFTA was on life-support over the past week with credible rumors from the White House that senior leadership was considering withdrawing from the agreement as late as Friday, due to conflicts between President Trump and Canada’s Prime Minister Trudeau.  While it appears those threats have passed for the present time, there will not be any movement on the NAFTA before the Mexican Presidential elections (July 1) and potentially mid-July. 
  4. Congress Efforts this week by certain members of the US Senate to reign in the Trump Administration’s tariffs failed to receive support, and it is likely that the Trump Administration will receive an extension of Trade Promotion Authority until 2021.  Consequently, the Trump Administration has clear legislative and political runways to pursue its trade agenda.
  5. Auto Tariffs The US Administration is pressing forward with up to 25% tariffs on automobile imports.  While Dickinson Wright previously indicated that these tariffs were unlikely to be imposed before the US midterms, our new intelligence is that the tariffs will be prepared for the President to announce by October 2018.  Dickinson Wright has included a full background article that relies heavily on our analysis at the end of this report for your review. 

As a result, when companies return from their Canada Day and Fourth of July parades and picnics, the global trade environment will experience the US imposing nearly $200 billion in tariffs on ferrous metals and China-sourced goods, and US exports subject to nearly $75 billion in retaliatory tariffs ($34 billion from China/$40 billion for Canada, EU, and Mexico). 

The overarching question is whether the US will be moving toward its objective of achieving “rebalanced” trade, or whether the global economy will be rapidly moving toward recession. Companies cannot wait for the answer. Contingency planning is a must.   

You can find background on these developments, as well as a sampling of Dickinson Wright’s comments in global media, as follows:

G7 NAFTA

NAFTA and tariffs

NAFTA and steel/aluminum

Steel and aluminum

Auto tariffs

Contact us to get a hold of Dan Ujczo or others at Dickinson Wright to work out your specific next steps.

Also watch this week for our recent event with Dan Ujczo discussing NAFTA more broadly.

Comments

1 comments on "Trade, Tariffs and Trouble: Get Ready"

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Demba on June 18, 2018 at 7:23:39 am said:
With the prospects of hard times ahead of the business landscape, contingency planning must be organized and led by such private sector for the benefit of both domestic and international markets... Anything that can distort trust in business environments affects the bottom line and actual US Administration doesn't seem to understand the very premise!

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