Tarrifs & Trade Policy: Where Do We Go From Here?

2018 will forever be remembered as a wild year in the realm of international trade. At the obvious risk of leaving out key issues, major trade-related developments during the last year included:

• President Trump imposing 25% tariffs on imported steel and 10% tariffs on imported aluminum, for “national security” reasons
• President Trump imposing tariffs of 10% and 25% (depending on the dates) on thousands of imports from China, and China subsequently retaliating with hefty tariffs on hundreds of U.S. products
• The United States, Canada and Mexico successfully finishing the negotiations for an updated NAFTA, and submitting the new agreement to their national legislatures for ratification
• The World Trade Organization suffering an existential crisis as member countries struggle to use the organization as an effective forum either to challenge protectionist actions or launch new multilateral deals
• The largest free trade agreement ever, the Trans-Pacific Partnership, going into effect (without the United States)
• Great Britain moving closer to its formal withdrawal from the European Union
• The re-imposition of trade and investment sanctions that prohibit doing business with or in Iran

Suffice to say that 2018 was a complicated year for companies that import, export, or otherwise conduct business internationally. Among other things, companies have been forced to: (a) reassess their supply chains (such as moving production outside of China); (b) seek legal ways to minimize the impacts of new tariffs (such as renegotiating contracts or reclassifying certain imports); and (c) find policy solutions to business problems (such as obtaining political support for tariff exclusion requests).

After what seemed like a never-ending parade of trade disruptions of 2018, it is reasonable to wonder if 2019 will be calmer, or just more of the same.  Here are some key questions that trade lawyers, and companies with (or affected by) international supply chains, will be asking in the coming months:

• Will the hefty U.S. tariffs on imported steel and aluminum remain in effect? At this point, the safe bet is yes. However, the U.S. Department of Commerce has been rather liberal in granting product-specific exclusions, so unless a pending court action invalidates the underlying regulatory basis for these tariffs, the status quo will likely continue: the tariffs stay but many companies achieve targeted relief.
• How much longer will the U.S.-China “trade war” continue? High-level diplomatic negotiations are ongoing, but it seems unlikely an agreement will be reached by March 1 that would negate a planned increase in the existing tariffs.  
• How will the shutdown of the U.S. government affect things like tariff exclusion requests and trade policy actions? The closures of the U.S. Department of Commerce and U.S. International Trade Commission will certainly lead to backlogs, although the Office of the U.S. Trade Representative seems to be moving forward with all of its key initiatives (including negotiations with China and, separately, the European Union).   
• Will the U.S. Congress ratify the new NAFTA (aka USMCA), or will the new Democratic majority in the House take this opportunity to derail a key piece of President Trump’s trade agenda? Ratification will likely be a combative, drawn-out process.
• Will domestic manufacturers allegedly harmed by imports—in the United States and elsewhere—feel emboldened by rising protectionist sentiments and thus file more trade remedy cases? This seems likely.
• To help companies and industries negatively impacted by the “trade war” with China, will the United States seek new market opportunities by re-entering the Trans-Pacific Partnership? Probably not—but this seems likely to happen after the 2020 Presidential election, regardless of the winner. 

These are just a few of the notable developments, and intriguing prospective questions, with respect to international trade. One thing is certain: 2019 will not be boring for those involved in trade.

Beau Jackson is a partner at Husch Blackwell LLP, working from the firm’s offices in Kansas City and Washington, DC.  His practice focuses on international trade, including customs issues, policy matters, and litigation at the intersection of trade and intellectual property disputes.