July 28, 2021

Washington Wire: White House to Release Budget February 11; State of the Union February 4


White House to Release Budget February 11; State of the Union February 4  

The Trump administration announced it will release its FY2021 federal budget on February 11, one week following the President’s State of the Union address to the full U.S. Congress. One Voice is coming off a strong victory where NTMA and PMA members helped increase funding for workforce training, registered apprenticeship programs, Manufacturing Extension Partnership programs (MEP), and Pell Grants. One Voice is working with the administration and members of Congress to build on that success and momentum to spread the word about the family sustaining careers available in the precision manufacturing industry and the need to increase resources available to employers across the country.



President Trump Releases Proclamation Expanding Section 232 Steel and Aluminum Tariffs
On January 24, President Trump released a proclamation expanding section 232 national security tariffs to include a narrow list of imported steel and aluminum “derivative” products. The 10% tariffs on aluminum derivatives and 25% on steel derivatives imposed for national security purposes only applies to: stamped steel or aluminum auto bumpers or steel or aluminum body stamping for agriculture; steel nails, tacks (other than thumb tacks), drawing pins, corrugated nails, staples for hand power tools or manual use; aluminum stranded wire, cables, plaited bands and the like, including slings and similar articles.
The White House stated as a reason for their action that their imposing tariffs on raw materials led to the increased importation of items made of steel and aluminum from overseas instead of purchasing from U.S. manufacturers such as One Voice members who face higher input costs and delivery delays. Some outside of One Voice reiterated their concern that the new tariffs will lead to customers importing a more finished product that does not have tariffs rather than purchase from domestic Tier II or III suppliers who still have higher input costs than their foreign competitors due to government intervention in the markets.
The proclamation states it will consider a downstream product “derivative” of an aluminum article or steel article if it meets three criteria. First, “the aluminum article or steel article represents, on average, two-thirds or more of the total cost of materials of the derivative article.” Second, “import volumes of such derivative article increased year-to-year since June 1, 2018,” following the imposition of section 232 tariffs, compared to the import volumes of such derivative article in the 2 years before the implementation of section 232 tariffs. Third, “import volumes of such derivative article following the imposition of the tariffs exceeded the 4 percent average increase in the total volume of goods imported into the United States during the same period since June 1, 2018.”
As many close followers of the steel and aluminum anticipated, the White House stated they are expanding duties to derivative products because the Section 232 national security tariffs on steel and aluminum have not worked as measured by the domestic producers’ capacity utilization rate. The president proclamation states that the utilization rate “has not stabilized for an extended period of time at or above the 80 percent capacity utilization level identified in his report as necessary to remove the threatened impairment of the national security….Capacity utilization in the aluminum industry has improved, but it is still below the target capacity utilization that the Secretary recommended in his report.”
The proclamation exempts Argentina, Australia, Brazil, Canada, Mexico and South Korea from duties on derivative steel products, and exempts Argentina, Australia, Canada and Mexico from the duties on derivative aluminum products. It also directs Secretary Ross to set up an exclusion process. The new tariffs on derivative steel and aluminum products is set to take effect on February 8.



 President Trump Signs New NAFTA Agreement
This morning in a ceremony at the White House, President Trump signed the U.S.-Mexico-Canada Agreement (USMCA). Earlier in January, the agreement easily passed in the Senate by a bipartisan vote of 89-10. Having passed by both Mexico and the U.S., the ratification process moves on to Canada. While Canadian lawmakers will take some time examining areas of the agreement, sources expect the country to ratify the USMCA no later than the end of March.
Once Canada passes the USMCA, the agreement will move into an Entry Into Force (EIF) phase. Before the agreement can take effect, the three parties to the agreement must confirm compliance with each provision within the USMCA in writing. At the moment, Mexico is still working towards compliance with the USMCA’s labor provisions, which will take several more months to complete. With Mexico still working towards compliance, the USMCA likely will take full effect no earlier than the end of the year.



EPA and Army Issue New Definition of WOTUS
On January 23, the EPA announced its new Waters of the U.S. (WOTUS) rule in a major step forward for One Voice and the others that have lobbied on this issue over the past several years. The revised definition identifies four clear categories of waters that are federally regulated under the Clean Water Act: the territorial seas and traditional navigable waters, like the Atlantic Ocean and the Mississippi River; perennial and intermittent tributaries, such as College Creek, which flows to the James River near Williamsburg, Virginia; certain lakes, ponds, and impoundments, such as Children’s Lake in Boiling Springs, Pennsylvania; and wetlands that are adjacent to jurisdictional waters. Although significant, this will not be the final resolution to the issue, as the rule was written to withstand a Supreme Court ruling (the likely destination for this regulation) on an Obama era regulation that sought to give the EPA jurisdiction on inland waterways including cooling ponds and snowmelt.



House Ways and Means Committee Hearing on Legislative Proposals Family Medical Leave
On January 28, the House Ways and Means Committee conducted a hearing on various proposed bills for paid family and medical leave. Although the hearing was more of a listening session, it telegraphs the probability that legislators in the House will pass legislation supporting paid family leave in the coming months. Already, the FY2020 spending bill passed early this month included funding for twelve weeks of paid parental leave for federal workers coinciding with the birth of a child or the adopting or fostering of a child. That provision takes effect in October 2020 and marks a significant change in federal workplace policy. One Voice will continue monitoring for bills and regulations requiring paid family leave in the private sector.