The Supreme Court has punted on taking the non-delegation case brought before it by the AIIS, whose members hope to nullify the Trump administration’s Section 232 tariff on imported steel. Trade issues impacting Canada, Vietnam, China, and the WTO are also covered, as well as recent US visa restrictions.
The weekly trade report by L.C.
The Supreme Court on June 22nd declined, without comment, to hear the case filed by the American Institute for International Steel and two of its member companies challenging the constitutionality of the president’s authority to impose trade restrictions under Section 232 of the 1962 Trade Expansion Act. AIIS had asked the court to find that Congress violated the Constitution’s separation of powers when it delegated to the President the broad authority over trade that the Constitution grants to Congress, and therefore that the 25% steel tariffs should be removed.
This outcome had not been certain and was a disappointment to those who believe that congressional delegation of its legislative responsibilities to the executive branch has gone too far.
This week’s decision does not necessarily mean the Supreme Court believes the delegation of authority involved in the Section 232 law is proper, just that it doesn’t want to deal with the issue at this time in this particular case.
While several Supreme Court justices are reportedly interested in taking on a heavy-hitting separation of powers case that implicates [the] non-delegation doctrine, justices may not have been eager to address the issue in a case involving national security, where the executive tends to reign supreme.
Commerce Department calls undervalued currency an unfair subsidy
The Commerce Department announced on June 23rd that it has begun investigating whether it should levy antidumping and countervailing duties on imports “of passenger vehicle and light truck (PVLT) tires from South Korea, Taiwan, Thailand, and Vietnam.”
The sole petitioner is the United Steel Workers Union (USW).
While this might seem like just another day at the Commerce Department, there is a new development. Commerce is considering the USW’s accusation that one of Vietnam’s unfair subsidies is its undervalued currency, the dong. This is the first time that Commerce has ever initiated such an investigation.
The PVLT case is also notable for being huge. Tire imports last year amounted to $1.17 billion from South Korea, $373.0 million from Taiwan, $1.96 billion from Thailand, and $469.6 million from Vietnam.
The USW charges that Chinese tire-makers diverted production to Taiwan, Thailand, Korea, and Vietnam to get around the duties set in 2015. According to the USW petition, “Chinese producers were eager to keep accessing the attractive US market despite the [2015] orders.” Thus, Chinese producers opened new plants in Thailand in 2015, 2017, and 2019; in Vietnam in 2014 and 2017; and in Taiwan in 2017, leading to “a renewed surge in imports of unfairly traded PVLT tires, this time from Korea, Taiwan, Thailand, and Vietnam.” These “prevented the domestic [tire] industry and its workers from fully participating in the growth in demand over the period of investigation.”
Will new tariffs on Canadian aluminum launch along with the USMCA?
The USTR appears ready to slap the 10% Section 232 tariff back on Canadian aluminum. The move is highly controversial. It is opposed by most of the US aluminum industry, likely to backfire economically, and oddly timed since it would – if the administration proceeds – begin just as the USMCA enters into force on July 1st.
The original Section 232 steel and aluminum tariffs, were imposed on Canada and Mexico in June 2018. They were ended for the two countries as part of the bargaining that led to the USMCA. But that arrangement had conditions in case steel or aluminum were found to be surging after the USMCA went into force.
VERs and gangsters with clean suits
To forestall the threatened tariffs, Canada could agree to voluntarily limit its aluminum exports to the US. In other words, it could implement a voluntary export restraint (VER), a form of managed trade that violates WTO rules. According to Canadian press reports, Ottawa has refused to impose a VER. This led to revival of the US tariff threat.
Suggesting how angry the Canadians really are, Flavio Volpe, the outspoken head of the Canadian Automotive Parts Manufacturers Association, told Bloomberg News that the new US threat is further evidence that
an unprincipled extortion syndicate is in charge of US trade policy. The biggest gangsters wear the cleanest suits…. These bandits would tax their own military [by hiking the aluminum price] to buy the votes of morons in an election year.
The tariff threat is in line with Lighthizer’s comment last week that he is eager for the USMCA to go into effect as soon as possible so that the administration can begin enforcing it. That is, he didn’t say the government is eager for the USMCA to start because of all the benefits it is claimed to bring, but rather because it will provide new grounds for punishing Canada and Mexico. Some observers are pointing out that this new tariff threat is likely to give other US trading partners reason to be cautious of negotiating trade agreements with US, or at least the present administration.
WTO withdrawal resolution allowed to die
The joint resolution for a US withdrawal from the WTO, introduced in the Senate and House in May, will not receive floor votes. This relieves legislators of having to take a position on what is a controversial matter in some of their districts. It also means that WTO withdrawal will almost surely not come up for a vote in Congress before 2025.
Although no one thought the resolution would ultimately be enacted – senior House and Senate Republicans also opposed it – having the full House and Senate debate it would have been an unpleasant spectacle.
US-China deal ‘intact’ but threatened by mounting tensions
US-China relations got off to a rocky start last week when presidential trade adviser Peter Navarro said the Phase One trade agreement “is over,” China claimed US agricultural exports could be infected with the coronavirus, and Congress moved ahead with more sanctions bills.
The situation feeds into a debate over whether the US or China would have the most to lose if the agreement collapses. Many think China has little to lose. Ending Hong Kong’s special trade status would hurt the territory more than the mainland. The US on the other hand — or at least President Trump — has a lot to lose since a deal failure would hurt him politically. Failure would be especially damaging to US farmers, and there isn’t much he could do to punish China. So, in this view, the pressure is on the White House to keep the agreement “intact.”
This seems to be confirmed by President Trump’s own admission, in an Axios interview, that he held off on criticizing human rights abuses in Xinjiang in order not to endanger the trade deal.
New visa restrictions could backfire
President Trump tightened restrictions on who can enter the US by means of a new proclamation that took effect on June 24th,. The additional restrictions will expire at year’s end — hence, after the elections.
The new order, according to an administration official, will keep 525,000 foreign workers away. The affected workers include the highly-skilled, low-skilled (often seasonal), and even business executives. The visa categories included are the H-1B (used by highly skilled workers), H-2B, H-4, J-1, J-2, L-1, and L-2.
In short, the ban covers almost all foreigners and their dependents.
Visa issuance already down
The pandemic had already caused the applications and issuance of work visas to slow dramatically. Nevertheless, business organizations have come out strongly against the new restrictions. Many analysts warn that they will impact US competitiveness in the future, as the country is not domestically producing enough highly skilled workers – or even certain categories of low-skilled workers. Historically, immigrants have been shown to raise the overall wage and productivity level.
The move could also deter foreign investment in the US and harm US citizens working abroad if other countries adopt visa reciprocity. As one immigration attorney stated, “Companies are going to rethink where they make their investments…if there’s business uncertainty as to whether they can bring in their own supervisors. There is no real national interest in doing this.”
The president couched the move as aimed at helping US workers so they won’t be competing with foreigners during the pandemic.
L.C. reports on trade matters for business as well as Founders Broadsheet.
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