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The Trump administration took major steps last week to rebuild large sections of the U.S. tariff wall knocked down when the Supreme Court ruled against its use of a national security law, putting more than 60 trading partners around the world on notice that new duties may soon be imposed.
On March 11, the Office of the U.S. Trade Representative (USTR) initiated a trade investigation into the manufacturing practices and policies of China, the European Union (EU), Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India. This was quickly followed by an announcement of another investigation into trade and labor practices and policies of 59 countries and the EU.
Section 301 of the Trade Act of 1974, the law under which the investigations are taking place, grants the president authority to impose tariffs following an investigation by the USTR and a finding of trade practices or policies deemed unfair or discriminatory.
Grant Thornton insight:
New Section 301 tariffs on imports from these countries would likely be at similar levels to those the administration previously levied using the International Emergency Economic Powers Act (IEEPA), struck down by the Supreme Court. However, companies will have more time to prepare and a formal process, including a public comment period and hearing at USTR, during which to weigh in. Feedback from businesses could lead to changes in the exact structure of the new tariffs.
The tariffs could be put into place as early as May, following a standard comment and hearing process, similar to a rulemaking, by the USTR.
More tariffs could also result from digital trade investigations mentioned as a possibility in recent USTR comments to press; it’s unclear if these would be new or revivals of Section 301 inquiries into digital services taxes that were initiated during the first Trump administration.
Trump has also put in place a global 10% tariff on the value of many imports until late July, though multiple businesses and 24 states have sued over its legality. (See related article) Section 232 tariffs on steel, aluminum, copper, auto parts, timber, lumber and other materials and their derivative products also remain in place, with more on items ranging from prescription drugs and pharmaceutical ingredients to wind turbines likely this year.
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