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Trade Policy Can Help Ease Economic Harm from COVID-19, Senators Tell Trump

Wednesday, April 01, 2020
Sandler, Travis & Rosenberg Trade Report

Trade policy can be a tool to decrease the economic harm to the U.S. from the COVID-19 pandemic, 12 senators told President Trump in a March 25 letter. In particular, they said, the U.S. should continue to focus on creating new export opportunities while considering short- and long-term measures to restore confidence in the global economy.

Tariff Relief. The senators raised the idea of a “temporary deferral of duty collection for businesses to opt-in to” that would be similar to the Internal Revenue Service “providing Americans an additional 90 days to make tax payments without incurring interest or penalties.” Other members of Congress are supporting such a deferral as well, including eight who asked Treasury Secretary Steve Mnuchin in a March 26 letter to “immediately issue a directive to U.S. Customs and Border Protection to defer all tariffs for at least 90 days, or until the crisis passes.” In addition, a growing number of businesses are pushing Congress to enact legislation to this effect. For more information, please contact trade consultant Nicole Bivens Collinson.

In addition, the senators encouraged the president to take the following actions.

- consider allowing “all industries whose circumstances have changed because of the outbreak” to seek exclusions from the Section 301 tariffs on imports from China, including those whose requests have been denied or who had not previously requested an exclusion (a limited effort in this direction is ongoing)

- consider an automatic year-long extension of tariff exemptions already granted, some of which are set to expire soon

- consider a total moratorium on new tariffs or tariff increases for the time being because businesses and consumers have limited ability to adapt to them

- conduct a thorough review, including consultations with medical professionals, to determine if additional medical devices, pharmaceutical products, and other health and safety products that would address immediate needs warrant exemption from Section 301 tariffs

Trade Restrictions. The senators called on Trump to coordinate with other countries to ensure that import and export restrictions imposed in response to the pandemic are limited and do not jeopardize the global response. The U.S. appears to be moving in this direction, agreeing March 30 with other G-20 countries that emergency measures designed to tackle COVID-19 must be “targeted, proportionate, transparent, and temporary,” should not create unnecessary barriers to trade or disruption to global supply chains, and should be consistent with World Trade Organization rules.

The senators also urged Trump to pause any consideration of “Buy American” requirements for medical goods and equipment. Some administration officials have reportedly been pushing for such requirements as a way to decrease U.S. reliance on foreign suppliers. The senators said that while they can appreciate this goal, they are concerned that any such efforts right now could “risk paralyzing an utterly critical supply chain.”

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