January 24, 2019

Washington Wire: Commerce Department Recommends President Impose Steel, Aluminum Tariffs

02/22/2018

Commerce Department Recommends President Impose Steel, Aluminum Tariffs  

 
On Friday, February 16, the U.S. Commerce Department recommended the President take steps to impose tariffs and restrict imports of steel and primary, semi-finished aluminum and aluminum castings and forgings. The steel tariffs recommended could apply at 24% on all imports from all countries or 53% tariff rates on twelve nations. Commerce recommended at least a 7.7% tariff rate on all aluminum imports or a 23.6% rate on products from China, Hong Kong, Russia, Venezuela and Vietnam. In both instances, the government stated that all of those options will lead to steel and aluminum producers increasing their capacity utilization rates to 80%, the level at which Commerce believes the industries need to reach to sustain adequate profitability. President Trump has until April 11 to decide whether to take action on steel and April 19 for his decision on aluminum. The European Union, South Korea, and others have already threatened retaliation against U.S. products. One Voice has met with Secretary Ross, staff with the White House, members of Congress and actively pressed the media opposing tariffs. NTMA and PMA members who are willing to speak to the media, please contact info@metalworkingadvocate.org. For more information on the two cases and a list of the steel and aluminum products covered, click here.

 

 

 
NAFTA 2.0 Talks to Begin Seventh Round
 
The seventh round of NAFTA negotiations begin Feb 26-March 6 in Mexico City. Mexico’s chief NAFTA negotiator has already stated he expects a difficult round of talks. As in past rounds, negotiators plan on spending substantial time discussing auto rules of origin, one of the more controversial subjects of the talks so far. Under current law, vehicles with at least 62.5% NAFTA country components may cross borders duty free. Since the beginning of negotiations last summer, representatives of the U.S. have called for an increase of the component threshold to 85% while also mandating that 50% of a vehicle originate within the U.S. This position is not only opposed by Canada and Mexico, but also the U.S. auto industry and supply base who fear foreign manufacturers will simply choose to pay a 2.5% tariff on the finished vehicle rather than restructure their current supply chain to comply with the new 85% level. During the sixth round of meetings, Canada presented its own ideas on auto rules of origin which gained some support from Mexico. However, U.S. Trade Representative Robert Lighthizer dismissed the Canadian proposal, finding it vague and disappointing. In the past week, Canada also floated eliminating the Investor State Dispute Settlement process, a move supported by the U.S. but opposed by Mexico. Most observers now do not expect negotiators to finalize discussions until the final quarter of 2018 or early 2019 as talks of withdrawal fade.

 

 

 
January Funding Bill Postpones Medical Device and “Cadillac” Taxes
 
In its January 22nd continuing resolution to keep the government temporarily funded, Congress delayed taxes on medical devices and “Cadillac” health insurance plans. The medical device tax will now go into effect in 2020 and the Cadillac tax is delayed until 2022. Congress initially included both taxes in the Affordable Care Act of 2010. The medical device tax is a controversial $29.1 billion excise tax on medical devices that will force manufacturers to cut their research and development budget as well as eliminate jobs. This will allow One Voice additional time to seek a repeal of this burdensome and costly tax on America’s medical device manufacturers. The Cadillac tax is a 40% excise tax on the value of employer-sponsored health plans exceeding $10,200 per individual and $27,500 per family annually. This victory provides relief to the almost 22% of One Voice members who reported in 2017 that their current plans exceed the Cadillac tax threshold.

 

 

 
Higher Education Reform Continues to Move Forward
 
Both the House and the Senate continue to press forward with efforts to reform and reauthorize the Higher Education Act for the first time since 2008. The House Education Committee passed a Republican-supported bill, the PROSPER Act, which now awaits floor consideration. The main focus of the bill is on streamlining the student financial aid system by proposing one grant, one loan, and one work-study program with uniform repayment options for all students. While One Voice is supportive of many of the concepts in the bill, including the creation of an Apprenticeship Grants program concentrated on partnerships between businesses and institutions and the offering of Pell Grants for students who are pursuing short-term, certificate or vocational courses, any bill to reauthorize the Higher Education Act must ensure that the streamlining of programs does not lead to fewer resources serving key populations or remove oversight. With no Democratic support, the bill faces challenges to passage on the House floor.
 
The Senate Health Education Labor and Pensions Committee Chairman Lamar Alexander (R-TN) has held five hearings over the past several months in preparation for reauthorizing the Higher Education Act. The hearings have examined everything from ways to improve access and innovation to proposals simplifying federal financial aid. One proposal One Voice hopes becomes a part of the Higher Education Act reauthorization bill when it moves in the Senate is the JOBS Act, introduced by Senators Rob Portman (R-OH) and Tim Kaine (D-VA). The JOBS Act would expand Pell grant eligibility to students enrolled in short-term skills/job training programs that lead to industry-based credentials and would allow grants for programs with minimum 150 clock hours over at least 8 weeks, down from the current 600 plus hour requirement. The Chairman is expected to release a draft proposal or bill in the coming weeks with the goal of having a bipartisan bill approved by the full Committee in early spring.