#1 – NAFTA NEGOTIATORS AIM FOR MID-APRIL AGREEMENT IN PRINCIPLE
- In a rare glimpse of trade optimism, NAFTA ministers from all three countries will meet in DC this week to try to reach an "agreement in principle" that could be announced in Lima, Peru at the Summit of the Americas, which will be held on April 13th and 14th.
- • According to reporting from Inside U.S Trade, Canadian officials have said that auto rules of origin will to be the key issue that could unlock progress on all others. The talks this week could consider U.S. Trade Representative’s proposal to consider wages in the calculation of whether an auto qualifies for reduced tariffs under NAFTA. That proposal had initially been rejected by Mexico and Canada.
- • The pressure is on for the White House to come up with a positive narrative on trade. Therefore, look for previously hard line demands from the U.S. to be weakend (including demands on Canadian dairy access) or other issues dropped from the negotiations entirely.
- • Not to pour too much cold water on the progress, but an agreement in principle could mean many things. It could be an agreement only on auto rules of origin and some of the more controversial issues, or it could be an agreement on a framework for completion of the entire agreement. It also should be noted that if previous agreements in principle are any guide, it could still take many months before anything is sent to Congress for a vote.
#2 - All the tariff lists, in one place
• U.S. section 301 tariff list on Chinese imports that are scheduled to go into effect in early June after a 60 day comment period
• Full Chinese 301 retaliation list that will be imposed if the U.S. moves forward with the threatened tariffs above
• U.S. steel and aluminum 232 tariffs which were imposed on 3/23
• Full Chinese retaliation lists from 232 action on 128 U.S. exports that took effect on 4/2
BONUS: If you really want to get into the weeds on which agricultural products China is threatening to retaliate against (301), or already retaliating against, check out these USDA reports on 301 retaliation and 232 retaliation.
#3 - are the u.s. and china actually negotiating to prevent 301 tariffs from being implemented?
The short answer is, no, at least not according to China. Last week, a spokesman for China’s Ministry of Commerce said at a press conference: “We have noticed that many U.S. officials have hinted that the two sides are in talks, but that is not the real case.”
• The Chinese denials come after comments from Peter Navarro referring to active negotiations between the two countries. Navarro also stated last week that Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer would be co-leads for as-yet unidentified trade talks with China.
• What does success look like? Even if negotiations were to move forward, there have been many commentators who have noted that the Trump Administration has yet to define what success might look like in addressing China’s trade abuses on intellectual property (which spurred the most recent tariffs). These commentatrors have pointed out that it will be difficult to avoid tariffs through negotiations if we don't have a specific ask.
#4 – The 60 day campaign: ag takes the lead
• Look for every impacted industry to launch an all-hands-on-deck lobbying campaign against the 301 tariffs over the course of the next two months.
• First out of the gate has been the agriculture industry, led by soy commodity groups, who would be hit hardest. Last week, the American Soybean Association put out a statement that said in part:
“This is no longer a hypothetical, and a 25 percent tariff on U.S. soybeans into China will have a devastating effect on every soybean farmer in America.”
• The Farm Bureau also came out swinging with President Sonny Purdue saying:
“This has to stop. Growing trade disputes have placed farmers and ranchers in a precarious position. We have bills to pay and debts we must settle, and cannot afford to lose any market, much less one as important as China’s. We urge the United States and China to return to negotiations and produce an agreement that serves the interests of the world’s two largest economies."
• Ag’s pushback has been the focus of media coverage of the tariffs' aftermath including this front page story in the Washington Post.
#5 - possible subsidies for farmers impacted by tariffs
• The Administration has sought to temper farmer’s anger by floating potential subsidies that would mitigate any tariff impact on farmers. In fact, at today’s Cabinet meeting, President Trump suggested that the Administration is working to “make it up” to farmers. According to a transcript of today’s meeting Trump said:
“Our farmers are great patriots. These are great patriots and they understand that they're doing this for the country. And we'll make it up to them and in the end they're going to be much stronger than they are now."
•The two big challenges in creating a mitigation plan that would make farmers whole for any potential losses are 1) any such plan would be challenged not just by China but by other trading partners as an illegal subsidy at the WTO and 2) it would mean getting a Congress that is unhappy about tariffs in the first place to pass a potentially significant spending plan shortly before the midterm elections.
•Look for U.S. Ag Secretary Sonny Perdue to be asked about a potential mitigation plan when he goes before Congress on Wednesday.
#6 - ways & means to look at economic impacts of tariff hikes
Next Thursday, the full Ways and Means Committee will hold a hearing with private sector witnesses.
•Expect farmers and businesses to let loose on the Administration’s 301 and 232 tariff announcements and to describe in details the negative impacts the tariffs will have outside the beltway.
#7 – Next steps for ustr on 301
For all those planning to weigh in on 301, public comments are due to USTR on May 11th and there will be a public (and likely very long) on May 15th.