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Tariff-Based Disputes Continue to Characterize Trump Administration Trade Policies

Published online by Cambridge University Press:  17 October 2018

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Extract

Over the summer of 2018, trade relations between the United States and many of its trading partners continued to be marked by tensions. The United States and China ratcheted up their use of tariffs against each other. The United States both received and initiated requests for consultation with various countries at the World Trade Organization (WTO) related to its earlier steel and aluminum tariffs and to tariffs imposed in response by other countries. President Trump has continued to pursue the possibility of further tariffs, including with respect to automobile and uranium imports. The United States also escalated trade tensions with Turkey through various measures, explicitly linking some of these measures to Turkey's detainment of an American pastor. Despite the broader theme of tensions, negotiations have proved productive between the United States and two of its major trading partners—the European Union and Mexico—paving a way for future settlements. With the European Union, the Trump administration has reached a tentative understanding and agreed not to impose new tariffs while the parties negotiate toward finalizing this understanding. As to Mexico, in late August 2018 the Trump administration announced that the two countries had reached agreement with respect to many issues underlying their ongoing North American Free Trade Agreement (NAFTA) negotiations.

Type
International Economic Law
Information
American Journal of International Law , Volume 112 , Issue 4 , October 2018 , pp. 751 - 759
Copyright
Copyright © 2018 by The American Society of International Law 

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References

1 For a full discussion of previous developments in the U.S.-China trade relationship, see Jean Galbraith, Contemporary Practice of the United States, 112 AJIL 505 (2018) (including a description of Section 301 and its relationship to international trade law).

2 Office of the U.S. Trade Rep. Press Release, USTR Issues Tariffs on Chinese Products in Response to Unfair Trade Practices (June 15, 2018), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/june/ustr-issues-tariffs-chinese-products [https://perma.cc/6SWL-2EA8]; see also Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China's Acts, Policies and Practices Related to Technology, Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 28710, 28711 (2018).

3 Galbraith, supra note 1, at 507.

4 Donald J. Trump, Statement on China-United States Trade, 2018 Daily Comp. Pres. Doc. No. 426 (June 18, 2018).

5 Id.

6 People's Republic of China Ministry of Commerce Press Release, MOFCOM Spokesman Comments on the White House's Statement Released on June 18 (June 20, 2018), at http://english.mofcom.gov.cn/article/newsrelease/policyreleasing/201806/20180602759964.shtml.

7 See U.S. Customs & Border Prot., Section 301 Trade Remedies to be Assessed on Certain Products from China Effective July 6, 2018 (last modified Aug. 23, 2018), at https://www.cbp.gov/trade/programs-administration/entry-summary/section-301-trade-remedies-be-assessed-certain-products-china-effective-july-6-2018 [https://perma.cc/D67V-7454]. At the same time that these tariffs were imposed, USTR released a process by which members of the public can “request exclusion of a particular product from the additional duties to address situations that warrant excluding a particular product within a subheading, but not the tariff subheading as a whole.” Office of the U.S. Trade Rep. Press Release, USTR Releases Product Exclusion Process for Chinese Products Subject to Section 301 Tariffs (July 6, 2018), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/july/ustr-releases-product-exclusion [https://perma.cc/HD4G-3MGK]. In determining whether to grant an exclusion or not, “USTR may consider whether a product is available from a source outside of China, whether the additional duties would cause severe economic harm to the requestor or other U.S. interests, and whether the particular product is strategically important or related to Chinese industrial programs including ‘Made in China 2025.’” Id.

8 Raymond Zhong, China Strikes Back at Trump's Tariffs, but its Consumers Worry, N.Y. Times (July 6, 2018), at https://www.nytimes.com/2018/07/06/business/china-trump-trade-war-tariffs.html.

9 Office of the U.S. Trade Rep. Press Release, Statement by U.S. Trade Representative Robert Lighthizer on Section 301 Action (July 10, 2018), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/july/statement-us-trade-representative [https://perma.cc/QJX6-L9TY].

10 Id.

11 Office of the U.S. Trade Rep. Press Release, Statement by U.S. Trade Representative Robert Lighthizer on Section 301 Action (Aug. 1, 2018), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/august/statement-us-trade-representative [https://perma.cc/RMJ2-5BDP].

12 Keith Bradsher & Cao Li, China Threatens New Tariffs on $60 Billion of U.S. Goods, N.Y. Times (Aug. 3, 2018), at https://www.nytimes.com/2018/08/03/business/china-us-trade-tariffs.html.

13 Office of the U.S. Trade Rep. Press Release, USTR Finalizes Second Tranche of Tariffs on Chinese Products in Response to China's Unfair Trade Practices (Aug. 7, 2018), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/august/ustr-finalizes-second-tranche [https://perma.cc/2KSW-P6SJ] (announcing that these tariffs would take effect on August 23); People's Republic of China Ministry of Commerce Press Release, MOFCOM Spokesman Comments on China's Countermeasures on US$16 Billion Worth of Products Imported from the US (Aug. 9, 2018), at http://english.mofcom.gov.cn/article/newsrelease/policyreleasing/201808/20180802775504.shtml (announcing that these tariffs would “be implemented synchronously with the US side”).

14 See Anna Fifield, China China Says U.S. Is “Holding a Knife to Our Neck” in Trade War, Wash. Post (Sept. 25, 2018), at https://www.washingtonpost.com/world/china-says-the-us-isholding-a-knife-to-our-neck-in-trade-war/2018/09/25/1d0d4f58-c0a6-11e8-92f2-ac26fda68341_story.html?utm_term=.8676d85bcf24 (also noting that Trump has indicated that he will impose tariffs on an additional $267 billion of Chinese goods given retaliation by China to the tariffs on $200 billion of goods). The tariffs imposed by China range from 5% to 10%, see id., while the tariffs imposed by the United States are initially set at 10% but slated to rise to 25% on January 1, 2019. See White House Press Release, Statement from the President (Sept. 17, 2018), at https://www.whitehouse.gov/briefings-statements/statement-from-the-president-4/ (also noting that September 24, 2018 is the start date for the tariffs).

15 Galbraith, supra note 1, at 509 (describing how both countries initiated requests for consultations in the spring of 2018).

16 White House Press Release, Office of Trade & Manufacturing Policy Report: “How China's Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World” (June 19, 2018), at https://www.whitehouse.gov/briefings-statements/office-trade-manufacturing-policy-report-chinas-economic-aggression-threatens-technologies-intellectual-property-united-states-world [https://perma.cc/7EQ9-XBPZ].

17 See Galbraith, supra note 1, at 506–07, n.15.

18 Donald J. Trump, Statement on Congressional Action on Legislation to Reduce the National Security Risks Posed by Certain Types of Foreign Investment, 2018 Daily Comp. Pres. Doc. No. 459 (June 27, 2018) (also setting in motion, among other things, multi-agency efforts to “engage with our allies and partners to support their efforts to combat harmful technology transfer and intellectual property theft”). While FIRRMA is not explicitly about China, in practice it is very much a part of broader U.S.-China trade relations and indeed Trump referenced the ongoing Section 301 investigation in his remarks endorsing FIRRMA. See id. Initial reports before the FIRRMA endorsement took place described a plan by the Trump administration to impose severe restrictions on Chinese investments in U.S. technology firms, citing national security concerns. Bob Davis, Trump Plans New Curbs on Chinese Investment, Tech Exports to China, Wall St. J. (June 24, 2018), at https://www.wsj.com/articles/trump-plans-new-curbs-on-chinese-investment-tech-exports-to-china-1529883988; Saleha Mohsin & Jenny Leonard, U.S. Plans to Curb Chinese Tech Investments, Citing Security, Bloomberg (June 24, 2018), at https://www.bloomberg.com/news/articles/2018-06-24/u-s-plans-curbs-on-chinese-investment-citing-security-risks. Secretary of the Treasury Steve Mnuchin denied these reports, and asserted that a forthcoming statement on the matter would “not [be] specific to China, but to all countries that are trying to steal [U.S.] technology.” Steven Mnuchin (@stevenmnuchin1), Twitter (June 25, 2018, 7:41 AM), at https://twitter.com/stevenmnuchin1/status/1011258207182966786 [https://perma.cc/M2SC-MC6A]. The FIRRMA endorsement followed a few days later.

19 Jill Colvin, President Trump Doesn't Mention John McCain as He Signs Defense Bill Named for Him, Time (Aug. 13, 2018), at http://time.com/5365956/trump-john-mccain-defense-bill.

20 Pub. L. No. 115–232, § 889, _ Stat. _ (2018) (also applying to Huawei Technologies Companies and including various other conditions, including making temporary waivers available under certain circumstances). For more about ZTE, see Galbraith, supra note 1, at 509–10 (describing ZTE's violations with respect to North Korea, subsequent executive branch sanctions, and the Trump administration's decision to try to avoid sanctioning ZTE to the point of collapse); U.S. Dep't of Commerce Press Release, Commerce Department Lifts Ban After ZTE Deposits Final Tranche of $1.4 Billion Penalty (July 13, 2018), at https://www.commerce.gov/news/press-releases/2018/07/commerce-department-lifts-ban-after-zte-deposits-final-tranche-14 [https://perma.cc/3LTK-Y228] (announcing that ZTE had paid the final tranche of a $1.4 billion settlement and that the Department had lifted a ban on ZTE's ability to use U.S. technology exports); Jordain Carney & Rebecca Kheel, Congress Won't Block Trump's Deal to Save Chinese Telecom Giant ZTE, Hill (July 20, 2018), at http://thehill.com/blogs/ballot-box/398086-defense-bill-wont-block-trumps-zte-deal (noting that congressional efforts to take a tougher approach to ZTE in the NDAA were unsuccessful).

21 For discussion of the original enactment of the Section 232 steel and aluminum tariffs, see Jean Galbraith, Contemporary Practice of the United States, 112 AJIL 315, 316–18 (2018).

22 Request for Consultations by Norway, United States—Certain Measures on Steel and Aluminum Products, WTO Doc. WT/DS552/1 (June 12, 2018); Request for Consultations by the Russian Federation, United States—Certain Measures on Steel and Aluminum Products, WTO Doc. WT/DS554/1 (June 29, 2018); Request for Consultations by Switzerland, United States—Certain Measures on Steel and Aluminum Products, WTO Doc. WT/DS556/1 (July 9, 2018). For information on earlier WTO consultations requests, and for a fuller discussion of the legal arguments advanced therein, see Jean Galbraith, Contemporary Practice of the United States, 112 AJIL 499 (2018).

23 E.g. Communication from the United States, United States—Certain Measures on Steel and Aluminum Products, WTO Doc. WT/DS552/9 (June 22, 2018). For a discussion of how both the U.S. assertion of a national security interest and the decision by some major trading partners to respond by imposing retaliatory tariffs under the Agreement on Safeguards (rather than going through the full WTO dispute process) fit into the broader context of the WTO system, see Weiler, Joseph, Black Lies, White Lies and Some Uncomfortable Truths in and of the International Trading System, 29 Eur. J. Int'l L. 339 (2018)Google Scholar.

24 Request for Consultations by the United States, Canada—Additional Duties on Certain Products from the United States, WTO Doc. WT/DS557/1 (July 16, 2018) [hereinafter U.S. Request with Canada]; Request for Consultations by the United States, China—Additional Duties on Certain Products from the United States, WTO Doc. WT/DS558/1 (July 16, 2018); Request for Consultations by the United States, European Union—Additional Duties on Certain Products from the United States, WTO Doc. WT/DS559/1 (July 16, 2018); Request for Consultations by the United States, Mexico—Additional Duties on Certain Products from the United States, WTO Doc. WT/DS560/1 (July 16, 2018); Request for Consultations by the United States, Turkey—Additional Duties on Certain Products from the United States, WTO Doc. WT/DS561/1 (July 16, 2018).

25 See People's Republic of China Ministry of Commerce Press Release, Spokesman of Ministry of Commerce Comments on China's Decision to Slap Tariffs on Part of Products Imported from US (Apr. 3, 2018), at http://english.mofcom.gov.cn/article/newsrelease/policyreleasing/201804/20180402733539.shtml (imposing tariffs on 128 categories of U.S. imports); David Alire Garcia & Miguel Gutierrez, Aiming at Trump Strongholds, Mexico Hits Back with Trade Tariffs, Reuters (June 5, 2018), at https://www.reuters.com/article/us-usa-trade-mexico/aiming-at-trump-strongholds-mexico-hits-back-with-trade-tariffs-idUSKCN1J11EV (describing Mexican tariffs imposed on a variety of U.S. goods, including steel, pork, and bourbon); European Commission Press Release, EU Adopts Rebalancing Measures in Reaction to US Steel and Aluminum Tariffs (June 20, 2018), at http://trade.ec.europa.eu/doclib/press/index.cfm?id=1868 (announcing a decision to impose immediate tariffs on some €2.8 billion worth of U.S. goods, with a further €3.6 billion to follow at a later date); Turkey to Start Implementing Retaliatory Tariffs Against United States, Reuters (June 21, 2018), at https://www.reuters.com/article/us-usa-trade-turkey/turkey-to-start-implementing-retaliatory-tariffs-against-united-states-idUSKBN1JH0DY [hereinafter Turkey Retaliatory Tariffs] (reporting on retaliatory tariffs worth some $266.5 million, covering “U.S. coal, paper, walnuts/almonds, tobacco, unprocessed rice, whisky, automobiles, cosmetics, machinery equipment and petrochemical products”); Department of Finance Canada, Countermeasures in Response to Unjustified Tariffs on Canadian Steel and Aluminum Products (July 1, 2018), at https://www.fin.gc.ca/access/tt-it/cacsap-cmpcaa-1-eng.asp (listing Canada's responsive tariffs). Mexico has also imposed a second round of tariffs. See Sabrina Rodriguez, Mexico Imposes Retaliatory Tariffs on Dozens of U.S. Goods, Politico (July 5, 2018), at https://www.politico.com/story/2018/07/05/mexico-imposes-retaliatory-tariffs-670424.

26 E.g., U.S. Request with Canada, supra note 24.

27 E.g., id.

28 E.g., id.

29 For description of a challenge brought in March, see Galbraith, supra note 22, at 504.

30 Complaint, Am. Inst. for Int'l Steel, Inc. v. United States (No. 18-00152) (U.S. Ct. Int'l Trade June 27, 2018).

31 Id. at 1; see also Memorandum in Support of Plaintiffs’ Motion for Summary Judgment, Am. Inst. for Int'l Steel, Inc. v. United States, 3 (No. 18-00152) (U.S. Ct. Int'l Trade July 19, 2018) (elaborating on this argument in the course of moving for summary judgment and emphasizing the absence of judicial review with respect to how the president exercises his or her discretion).

32 See Lemos, Margaret H., The Other Delegate: Judicially Administered Statutes and the Nondelegation Doctrine, 81 S. Cal. L. Rev. 405, 418 (2008)Google Scholar (observing that since 1935 “the Court has never since invalidated a federal statute on the ground that it delegates excessive lawmaking authority to an agency”); see also Whittington, Keith E. & Iuliano, Jason, The Myth of the Nondelegation Doctrine, 165 U. Pa. L. Rev. 379, 404 (2016)Google Scholar (observing that “[a] review of the Court's treatment of challenges to federal and state statutes on the grounds that they had impermissibly delegated legislative power to nonlegislative actors does not provide much basis for thinking that there was ever a seriously confining nondelegation doctrine as part of the effective constitutional order”). In its 2018 term, the Supreme Court will hear a case in which a criminal statute has been challenged as an unlawful delegation of executive power. Gundy v. United States, 138 S. Ct. 1260 (2018); see also Gundy v. United States, SCOTUSblog, at http://www.scotusblog.com/case-files/cases/gundy-v-united-states (noting that the issue at stake is “[w]hether the federal Sex Offender Registration and Notification Act's delegation of authority to the attorney general to issue regulations under 42 U.S.C. § 15913 violates the nondelegation doctrine”).

33 For a discussion of what Section 232 investigations entail, see Galbraith, supra note 21, at 316–18.

34 U.S. Dep't of Commerce Press Release, U.S. Department of Commerce Initiates Section 232 Investigation into Auto Imports (May 23, 2018), at https://www.commerce.gov/news/press-releases/2018/05/us-department-commerce-initiates-section-232-investigation-auto-imports [https://perma.cc/A8XL-M79N].

35 U.S. Dep't of Commerce Press Release, U.S. Department of Commerce to Host Public Hearing on the Section 232 National Security Investigation of Imports of Automobiles and Automotive Parts (July 12, 2018), at https://www.commerce.gov/news/press-releases/2018/07/us-department-commerce-host-public-hearing-section-232-national-security [https://perma.cc/PY8E-AKWQ].

36 U.S. Dep't of Commerce Press Release, U.S. Department of Commerce Initiates Section 232 Investigation into Uranium Imports (July 18, 2018), at https://www.commerce.gov/news/press-releases/2018/07/us-department-commerce-initiates-section-232-investigation-uranium [https://perma.cc/3WTK-4GBF].

37 Galbraith, supra note 21, at 317–18.

38 See generally Galbraith, supra note 21; Galbraith, supra note 22 (describing various country-specific carveouts).

39 See Turkey Retaliatory Tariffs, supra note 25.

40 For a general overview of Brunson's arrest and detainment, see Ezgi Erkoyun & Humeyra Pamuk, U.S. Missionary Thrust to the Center of Turkey-U.S. Crisis, Reuters (Aug. 18, 2018), at https://www.reuters.com/article/us-turkey-security-usa-brunson-insight/u-s-missionary-thrust-to-the-center-of-turkey-u-s-crisis-idUSKBN1L30DR.

41 Donald J. Trump (@realDonaldTrump), Twitter (July 26, 2018, 8:22 AM), at https://twitter.com/realDonaldTrump/status/1022502465147682817.

42 U.S. Dep't of the Treasury Press Release, Treasury Sanctions Turkish Officials with Leading Roles in Unjust Detention of U.S. Pastor Andrew Brunson (Aug. 1, 2018), at https://home.treasury.gov/news/press-releases/sm453 [https://perma.cc/SJ37-JSHP] (describing these officials as having “leading roles in the organizations responsible for the arrest and detention of Pastor Andrew Brunson”).

43 Carlotta Gail, Turkey's Erdogan Orders Retaliatory Sanctions Against American Officials, N.Y. Times (Aug. 4, 2018), at https://www.nytimes.com/2018/08/04/world/europe/turkey-erdogan-sanctions-us.html (also noting that the U.S. officials identified are unlikely to have assets in Turkey).

44 Donald J. Trump, Proclamation 9772—Adjusting Imports of Steel into the United States, 2018 Daily Comp. Pres. Doc. No. 531 (Aug. 10, 2018).

45 Id.

46 Colin Dwyer, Turkey Counterpunches by Raising Tariffs on U.S. Goods, NPR (Aug. 15, 2018), at https://www.npr.org/2018/08/15/638842407/turkey-escalates-fight-by-raising-tariffs-on-u-s-goods.

47 Donald J. Trump, Remarks to Members of the Press with President Jean-Claude Juncker of the European Commission, 2018 Daily Comp. Pres. Doc. No. 504 (July 25, 2018).

48 Id. at 2.

49 Id.

50 Id.

51 Palmer, Doug, Juncker Hails “Major Concession” from U.S. on Autos, Politico (July 25, 2018)Google Scholar, at https://www.politico.com/story/2018/07/25/trump-juncker-trade-concession-tariffs-1661543.

52 U.S. Mission to Mexico Press Release, Modernizing NAFTA to Be a 21st Century Trade Agreement (Aug. 27, 2018), at https://mx.usembassy.gov/modernizing-nafta-to-be-a-21st-century-trade-agreement [https://perma.cc/YA2T-4JQ9].

53 Remarks During a Teleconference Call with President Peña Nieto of Mexico To Discuss the United States-Mexico Trade Agreement and an Exchange with Reporters, 2018 Daily Comp. Pres. Doc. No. 548 (Aug. 27, 2018), at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-phone-call-president-pena-nieto-mexico-united-states-mexico-trade-agreement (adding that “NAFTA … has a bad connotation”).

54 United States-Mexico Trade Fact Sheet: Modernizing NAFTA to Be a 21st Century Trade Agreement, at http://www.sice.oas.org/tpd/nafta/Modernization/USA_MEX_Fact_Sheet_21st_Century_Agt_e.pdf (reproducing a fact sheet originally available on the USTR website but subsequently removed).

55 See Ana Swanson, Katie Rogers & Alan Rappeport, Trump Reaches Revised Trade Deal with Mexico, Threatening to Leave Out Canada, N.Y. Times (Aug. 27, 2018), at https://www.nytimes.com/2018/08/27/us/politics/us-mexico-nafta-deal.html (also noting that issues relating to the steel and aluminum tariffs remain unresolved).