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January 3, 2018
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March 1, 2018

February 2018

Top Story: President Outlines New U.S. Trade Strategy For World Leaders

This week at the World Economic Forum in Davos, Switzerland, President Trump told global finance leaders that “America first” when it comes to trade "does not mean America alone". He stressed "The US is open for business," in his first address to the body last week.

"I'm here to deliver a simple message - there has never been a better time to hire, to build, to invest and to grow in the United States. America is open for business and we are competitive once again," he said.

He urged foreign investors to "bring your money, your jobs, your businesses to America".

But he continued to attack "predatory" trade practices, warning partners that the US would not tolerate unfair trade. This policy appeared to contradict the Davos conference's goal of promoting globalisation and co-operation.

President Trump lauded the economic achievements of his first year in office, including cutting corporation tax and lowering the unemployment rate, and said the US was more attractive than ever to foreign investment.

"America First, not America alone" was the key line of the speech, a message echoed by other leading members of the White House. The US president demanded a reformed international trade system that was "fair and reciprocal" and accused unidentified countries of unfair practices, including "massive intellectual property theft" and providing state aid to industry.

In a meeting with UK Prime Minister Theresa May at Davos, he said he expected "a tremendous increase" in trade between the US and Britain in the coming years.

President Trump's speech comes days after the US announced new tariffs of up to 50% on imported washing machines and solar panels, prompting an outcry from China and South Korea - the primary targets of the measure. Treasury Secretary Steve Mnuchin, also in Davos, has warned of "more to come" on trade tariffs.

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USTIC Hands Unexpected Loss to Boeing on Canadian Jet Imports

Canadian aerospace firm Bombardier has won a landmark case in the US, overturning a decision to impose huge 292% tariffs on imports of its C-Series planes, partly built in the UK. The surprise ruling overturns a finding by the US Commerce Department in December that the UK and Canada had given Bombardier unfair subsidies.

UK Prime Minister Theresa May welcomed the ruling - which safeguards thousands of jobs in Northern Ireland. Bombardier had been widely expected to lose the case, which followed a complaint by its US rival, Boeing. "Bombardier and its innovative workforce play a vital role in the Northern Ireland economy," she said.

The U.S. International Trade Commission voted 4-0 in favor of Bombardier, ruling that there was no injury to US manufacturers. Despite the initial finding by Commerce, the vote wasn’t even close. Tariffs of 292% will not now be imposed on orders of C-Series planes by US airlines.

Delta Airlines has 75 of the planes on order. About 50 companies in the UK supply Bombardier with parts for the C-Series, including 1,000 jobs in Belfast, where the wings for the plane are made. An adverse ruling would have had negative effects on both sides of the Atlantic.

The ruling is also good news for Airbus, which took advantage of Bombardier's struggles to take a majority stake in the C-Series. A spokesperson for Boeing said it was "disappointed" by the ITC's decision and that it would "review the detailed conclusions when they are released".

President Enacts Punitive Tariffs on Solar Panels and Clothes Washers

President Trump is adding a tax on imported washing machines that will likely make all washers more expensive in the United States. The tariff starts at 20% for the first 1.2 million imported washers this year. It then goes up to 50% for every other washer brought in after that. Tariffs on imported solar panels could rise by as much as 30 percent

Americans buy lots of washers from other countries, and trade experts have some advice. "Anybody who is thinking about buying a washing machine should do it right away," said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics.

It's too soon to say how much price tags will go up -- but everyone agrees they will eventually head north. A few factors are at play. For one, foreign-made washing machines will become more expensive to import. To remain competitive, manufacturers outside the U.S. likely won't pass the entire cost of the tariff onto customers, but prices will go up some. (more)

The tariff could likely drive consumers away from foreign-made washers and give American-made washing machines a boost. That means the largest U.S. manufacturer of washing machines, Whirlpool, now faces a little less foreign competition, paving the way for the company to raise its washer prices. Whirlpool hasn't indicated whether it will raise prices, but historically American companies tend to hike prices on customers when they face fewer foreign competitors due to tariffs or quotas.

Prices won't go up overnight. Since foreign-made washing machines have recently grown more popular in the United States, so home appliance stores like Home Depot and Lowe's may have a large inventory of washing machines already on the U.S. side of their supply chains.

Mexico exported to $240 million of washers to the United States in 2016; China sent $425 million worth; South Korean companies made $130 million of washers for the U.S. market, according to the U.S. International Trade Commission.

Samsung and LG are among the top exporters of washers to the United States. For Samsung, the tariffs are somewhat puzzling because it moved production of its washing machines two weeks ago to a new plant in South Carolina that will employ 600 Americans. Samsung said Monday that "everyone will pay more, with fewer choices." LG added that it was very disappointed with Trump's tariffs.

The tariffs add a wrinkle to the renegotiation of NAFTA, the trade pact between the United States, Mexico and Canada. Talks resumed Tuesday, and Mexican officials noted that they will respond to the tariffs.

But if Mexico retaliates, it may not be an old fashioned, tit-for-tat response, experts say. For example, Mexico buys lots of corn and soybeans from the United States. It's already been importing more of those commodities from Brazil and Argentina. Instead of adding a tariff on American corn or soy, Mexico could simply ramp up imports from South America.

The Trump administration also announced plans to hike tariffs on imported solar panels by as much as 30 percent as a result of a so-called "safeguard" investigation launched by U.S. Trade Representative Robert Lighthizer in May. In a statement, Lighthizer's office said cheap solar products from China, in particular, represented a "substantial cause of serious injury to the domestic industry" and that tariffs would provide American producers with a more level playing field.

But the higher cost of solar imports is expected to hurt American companies that design mounting systems and provide installation services, working adjacent to the panel production industry. The Solar Energy Industries Association estimates 23,000 American jobs will be lost this year as a result of the tariffs and that billions of dollars of renewable energy research and investment could be retooled or scrapped entirely.

U.S. To Reconsider the TPP?

A year after withdrawing from the Pacific-area trade pact, President Trump turned heads when he said he'd rejoin if the deal got better.

President Donald Trump appeared to open the door to re-entering Trans-Pacific Partnership discussions in Davos, Switzerland, almost exactly one year after first withdrawing from the regional trade pact.

During an interview at the annual World Economic Forum, Trump sat down with CNBC's Joe Kernen and said he'd be willing to jump back into TPP considerations if the deal could be made "substantially better."

"Somebody asked me the other day if I'd do TPP. Here's my answer. I'll give you a big story," Trump said. "I would do TPP if we made a much better deal than we had."

The President on Jan. 23, 2017, signed an executive order crafted to formally withdraw the U.S. from the upcoming trade deal with 11 other nations from around the world, including Canada, Mexico, New Zealand, Australia, Vietnam and Japan. He regularly targeted both TPP and the North American Free Trade Agreement during campaign rallies in the buildup to his presidential victory.

Trump on Thursday reiterated that he prefers bilateral trade deals to multi-party agreements like TPP and NAFTA "because, if you have a problem, you terminate."

"When you're in with many countries – like with TPP, so you have 12 if we were in – you don't have that same option," Trump said Thursday. "I'm only saying this: I would do TPP if we were able to make a substantially better deal."

Apparently caught off guard, Kernen paused to gather his thoughts, to which Trump responded: "Are you surprised to hear me say that?" "I'm a little bit, yeah. I'm a little bit taken aback," Kernen said.

"Don't be surprised. No – but we have to make a better deal. The deal was a bad deal, like the Iran deal was a bad deal. Those are bad deals," Trump responded.

Exactly what constitutes a "substantially better deal" in the President’s eyes is unclear. But throughout the NAFTA renegotiation process, his administration has prioritized, among other things, shrinking America's goods deficit, restructuring the process member countries take to settle disputes and retooling country-of-origin standards to require more products to be made with U.S. parts.

As Trump spoke from Davos, U.S. trade officials met in Montreal with their Mexican and Canadian counterparts for the sixth formal round of NAFTA renegotiations.

"We're renegotiating it. I may terminate NAFTA. I may not. We'll see what happens," Trump said, calling NAFTA a "horrible deal." "We're trying right now with [U.S. Trade Representative] Bob Lighthizer and the whole group. I think we have a good chance, but we'll see what happens."

U.S. Foreign-Trade Zone Board Activity

  • Plaza Warehousing & Realty Corporation received approval for subzone status subject to the existing activation limit of FTZ 61 in Caguas, Puerto Rico. LEARN MORE
  • BGM America, Inc. received approval for limited proposed production of Sailboats, Cabin Cruiser Powerboats, and Outboard Motor Boats, concerning a restriction requiring that a significant list of components be admitted to the subzone in privileged foreign status in their facility within Subzone 127A, in Marion, South Carolina. LEARN MORE
  • The Rhode Island Commerce Corporation, grantee of FTZ 105, requested the authority to reorganize zone 105 under the alternative site framework (ASF) adopted by the FTZ Board. LEARN MORE
  • The Madawaska Foreign-Trade Zone Corporation, grantee of FTZ 179, requested the authority to reorganize the zone under the alternative site framework (ASF) adopted by the FTZ Board. LEARN MORE
  •  Fuling Plastic USA, Inc. received approval for proposed production of Disposable Plastic and Paper Service Ware and Kitchenware Products in its facility within FTZ Subzone 272C, in Allentown, Pennsylvania. LEARN MORE
  • Plaza Warehousing & Realty Corporation was granted approval for the creation of FTZ sub-zone 61T in Caguas, Puerto Rico. LEARN MORE
  • Valeo North America, Inc. received approval for proposed production of Automotive Clutch and Compressor Assemblies for its facility within Subzone 47D, in Winchester, Kentucky. LEARN MORE
  • The application by Valeo North America, Inc. to establish Subzone 47D was approved for in Winchester, Kentucky. LEARN MORE
  • The application to establish Subzone 144C by Orgill, Inc., was approved in FTZ 144 in Tifton, Georgia. LEARN MORE
  • Lam Research Corporation (Lam) has requested expanded subzone status for FTZ 18. Subzone 18F consists of 13 sites in Fremont and Livermore, located in Tracy, California. LEARN MORE
  • Hyster-Yale Group, Inc. has requested an expansion of Subzone 98D for its facility in Sulligent, Alabama. LEARN MORE
  • Swagelok Company (Swagelok) has submitted a notification of proposed production activity for their facility in FTZ 40 located in Solon, Willoughby Hills, Highland Heights, and Strongsville, Ohio. LEARN MORE
  • E.R. Squibb and Sons, LLC has requested the expansion of Subzone 49C for its facility located in New Brunswick, New Jersey.  LEARN MORE
  • Quad/Graphics, Inc.—Chemical Research\Technology (Quad/Graphics—C\RT), has submitted a notice for proposed production of Offset and Gravure Publication Printing Ink for their facility in FTZ 41 located in Hartford and Sussex, Wisconsin. LEARN MORE
  • Cummins, Inc. has received approval for proposed production of Gas and Diesel Engines in their facilities within Subzone 23D, in Lakewood and Jamestown, New York. LEARN MORE
  • Estee Lauder Inc. received approval for proposed production of Skin Care, Fragrance, and Cosmetic Products in its facility within FTZ 35, in Bristol and Trevose, Pennsylvania. LEARN MORE

All Locked Up

The Potomac River doesn’t normally freeze solid anymore. But an unusually cold blast of winter locked up the entire river this year . . . and seemingly the rest of Washington D.C. as well. The chill seemed to blow through the halls of Congress, freezing up the federal government for 3 days last month!

 

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