Vanessa Sciarra advised the fastener industry to work with trade associations on tariff issues. Sciarra, VP for legal affairs and Trade & Investment Policy for the National Foreign Trade Council, spoke at a 2018 International Fastener Expo conference session.

Sciarra’s #1 suggestion to the fastener industry on the issues of President Donald Trump’s tariffs is to work with steel-related organizations.

“The automotive and equipment associations work hard,” Sciarra said. “They are your best friends.” Beyond lobbying, they sponsor such activities as fly-ins and educational webinars.

Second, “Your customs people need to understand this stuff is not going to go away,” Sciarra said.

“Do not see the tariffs as short-term impediments – they may be in place for much of the medium to long-term,” Sciarra predicted.

Sciarra listed the core elements emerging as central to the Trump trade agenda as resetting the relationship with China; renegotiating NAFTA and tariffs as leverage for new trade relationships.

An early result of the Trump tariffs? Sciarra said that as the U.S. disengages, other countries are re-engaging. Sciarra said there is “limited coordination with allies.”

She cited the CPTPP by Japan, Australia, New Zealand, Canada, Mexico, Singapore and Chile plus free trade agreements in Europe, Mexico and Canada. There now may be benefits to locating in those free trade areas rather than North America, Sciarra suggested.

The Trump Administration believes China has “hegemonic intentions” with the goal of dominating world markets, setting pace of technological change and setting international standards.

Trade has been a personal concern of Donald Trump for 25+ years and he found allies in Peter Navarro and Bob Lighthizer, Sciarra said.

The new U.S. tariffs are on $250 billion of Chinese imports, with another $267 billion planned.  China has countered with $110 billion in exports to China – largely on agricultural products from traditionally Republican-voting states.

There are no current negotiations, Sciarra pointed out. One possibility is at the next round of G-20 meetings November 30 in Argentina.

Trump may need a multilateral approach to deal with China, Sciarra said. There are “some signs in U.S. / Japan dialogue on WTO and China issues, but can the Trump Administration work well with others?”

Auto tariffs are delaying implementation of a deal with Korea, but the threat of auto tariffs “may have brought Japan to the table,” Sciarra speculated. There is a “placeholder” deal with the EU, “with some limited regulatory cooperation outcome possible this fall, again with auto and steel tariffs as the motivating factor.”

Trump launched a Section 232 investigation on autos and auto parts early in 2018, but there is “no support for the action from any segment of the auto industry or Congress – the entire industry from dealers to manufacturers to suppliers is unified in opposition to this approach.”

The goal was to complete the investigation by August, but the report “is allegedly being delayed due to concerns about midterms and effects the release of the report could have on elections.” The current projected release is in the early months of 2019.

If you are seeking an exclusion, it is best to contact your representatives and senators. Sciarra said especially Republican senators are at the White House constantly.

The Section 232 tariffs are based on the 1960s Cold War era statute to protect the U.S. ability to ramp up quickly in case of the next war. It delegates broad power to the president to use tariffs when he finds a “national security” threat to a domestic industry.

“Section 232 tariffs on imported steel and aluminum are based on economic security, but are “really about economic nationalism,” Sciarra commented.

President Donald Trump will use tariffs as leverage or “weapons” for new trade agreements.

NAFTA is now USMCA. The changes were negotiated quickly because two-thirds of the new agreement were based on the Trans-Pacific Partnership. However, USMCA still has to be approved by Congress.

“Most controversial issues involve auto rules of origin,” Sciarra explained. The Trump goal “is to bring auto and parts manufacture back to the U.S. from Mexico.”

The USMCA does not include a resolution on steel and aluminum tariffs.

TPP was a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the U.S. It was signed in 2016 but died when President Trump rejected it. The other 11 nations then negotiated the Comprehensive & Progressive Agreement for Trans-Pacific Partnership.

There is not a final resolution on steel and aluminum tariffs and separate deals are likely such as “side letters” (addendums) on automotive tariffs. There is a yearly export quota and exports above the quota would face high tariffs, Sciarra explained.

There is a question about the depth of support among U.S. businesses and Congress and whether House Democrats will support implementing legislation.

Trump “needs political ‘wins’,” Sciarra said and USMCA and possible “mini-deals” with Europe, Japan and India could be “proof” of his strategy.

The auto industry has given “grudging support” to the tariffs, Sciarra said.

• Tariff exclusions can be granted on specific steel or aluminum products if they are not produced in the U.S. in a sufficient and reasonably available amount or of a satisfactory quality or based upon specific national security considerations. Exclusion requests must be filed by an individual or organization which uses the steel or aluminum products in domestic business activities, such as construction, manufacturing, or supplying steel/aluminum products. Exclusions are on a per product basis and limited to the party seeking the exclusion. The

Department of Commerce may approve a broader application to additional importers.

Only about 20% of exclusion requests have been granted thus far, Sciarra said.

Sciarra termed exclusions as “cumbersome to navigate, subject to objections and there is no automatic renewal.”

• Tariff exemptions are for countries, not companies, Sciarra explained. South Korea, Brazil and Argentina have agreed to export restraints. Australia has “implicit voluntary export restraints.”

She advised working with a customs professional for reclassifications of products, rethinking the supply chain sourcing and work with Washington DC experts in the process and know Commerce.

Sciarra termed the World Trade Organization “paralyzed” by the U.S. tariffs.

Many importers quickly began “stockpiling last spring,” but as supplies are used there will be a “new normal” on pricing, Sciarra said. “Buckle your seat belt on that one,” she advised.

“It isn’t just importing prices that may change,” Sciarra predicted. “We may see more fabricating offshore to circumvent exclusion requirements.” Web: NFTC.org