Tariffs, NAFTA, and the Administration

Transcription

1 Tariffs, NAFTA, and the Administration Presented by The Franklin Partnership, LLP Policy Resolution Group at Bracewell LLP March 2018

2 Your Team in Washington, D.C. Lobbying Firm The Franklin Partnership, LLP Bi-partisan Washington, D.C.-based government relations firm 80 years combined experience; representing manufacturing industry since 2003 Clients include: Manufacturing associations, defense manufacturers, hospitals, cities Strategic Communications Firm Policy Resolution Group at Bracewell Wash, D.C.-based public affairs & strategic communications consultants Promote NTMA and PMA in print, digital and other media Support Franklin Partnership government relations efforts by designing and implementing coordinated strategic communications strategy Representing metalworking industry since 2003

3 Free Government Assistance with Exporting (800) USA-TRADE ( ) Will help identify and qualify leads for potential buyers, distributors, joint venture partners, and licensees Free initial consultation from the Export Legal Assistance Network (request through a U.S. Export Assistance Center) EAC 100 Cities; 80 Countries - Int l Advocacy Center Selling to a Foreign Government U.S. official overseas can meet w/foreign gov t official (202) or visit Official Trade Missions

4 - Aerospace Industry Free Market Research by Industry or Country from U.S. Dept. of Commerce

5 Support with export and other governmentbacked loans and filling out forms

6 Our Members Export Directly Do you directly export parts or products? 46% Do you directly export to Mexico or Canada? 56% Do you indirectly export (your customer ships)? 82% Is any of your steel/raw material imported? 26% Is any of your capital equipment imported? 46%

7 Current U.S. Free Trade Agreements

8 NAFTA and Trade Agreements

9 Trade Trade Agreements, NAFTA Withdrew from Transpacific Partnership (TPP) Agreement on Day One - TPP-11 signed on March 8; China announced regional partnership with 15 countries - UK cannot enter new agreement until it leaves EU, Japan not willing right now, India a possibility - President s authority to unilaterally negotiate agreements (TPA) expires July 1, Bilateral agreements unlikely until NAFTA negotiations conclude NAFTA Renegotiations Round 7 Complete - U.S. goal is to balance the trade deficit - U.S. wants increase Rules of Origin from 62.5% to 85%; include 50% U.S. Domestic Content - Canada went around U.S. negotiators, floating 70% proposal to Congress, auto OEMs, suppliers - Possible sunset provision: if certain level not achieved, NAFTA automatically phases out NAFTA Timeline - Round 7 was Feb 26 to March 6 in Mexico City - Mexican Presidential Election July 1 st - Had hoped to conclude negotiations by December 2017 (started August 16 th ) - Most expect talks to continue for several months; possibly deal finalized final quarter of 2018, early 2019

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11 Trade 25% Steel Tariffs 25% Tariff on all Steel Products from all Countries except Canada and Mexico - President asked Commerce Dept. in April 2017 to report on impact of imported steel on U.S. security - Report delayed from June 30, sent to White House January 11, 2018, released to public Feb 16 What and When are Steel Products Covered? - Effective 12:01am on March 23, % Tariff on Steel Imports on goods entered, or withdrawn from warehouse for consumption - Steel flat, long, semi-finished, pipe and tube, and stainless steel - Does not include downstream products (aluminum includes castings and forgings) Commerce Secretary Recommendations - Goal is to reduce imports by 37 percent and increase capacity utilization to 80% from the current 73% - Commerce Department recommended 24% global tariff; or - 53% tariff on all imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey, Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to U.S.; or - Quota on all steel from all countries equal to 63% of each country s 2017 exports

12 Trade 10% Aluminum Tariffs 10% Tariff on all Aluminum Products from all Countries except Canada and Mexico - President asked Commerce Dept. in April 2017 to report on impact of imported steel on U.S. security - Report delayed from June 30, sent to White House January 19, 2018, released to public Feb 16 What and When are Aluminum Products Covered? - Effective 12:01am on March 23, % Tariff on Aluminum Imports on goods entered, or withdrawn from warehouse for consumption - Applies to: aluminum castings and forgings; plate; sheet, strip, and foil (flat rolled products); wire; bars, rods and profiles; tubes and pipes; tube and pipe fittings Commerce Secretary Recommendations - Goal is to raise domestic production of aluminum from the present 48% average capacity to 80% - A tariff of at least 7.7% on all aluminum exports from all countries; or - A tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam. All the other countries would be subject to quotas equal to 100% of their 2017 exports to the U.S.; or - A quota on all imports from all countries equal to a max of 86.7% of their 2017 exports to U.S.

13 Defense consumes 3% of U.S. Steel Defense consumes 20% of U.S. made high-purity aluminum Canada = 43% of aluminum imports Canada = 2x Russia/China combined 164 import duty cases on steel today Nucor s earnings increased 2/3 U.S. Steel posted $337m profit 201 Steel tariffs cost 200,000 jobs - Ohio lost 10,553 - Michigan 9,829 - Pennsylvania 8,400 New Study: Net 146,000 jobs lost due to 232 tariffs The Facts

14 Metal Stamping Imports Time Measures Country Value ($) Value ($) Value ($) World Total 372,181, ,611, ,289,114 Mexico 87,698, ,533, ,953,289 China 33,634, ,105, ,792,833 Canada 104,337, ,752, ,042,731 Spain 38,282,416 51,647,828 74,011,520 Italy 16,159,871 15,829,473 19,819,903 France 24,324,669 17,605,618 19,608,879 Germany 12,834,462 20,697,935 19,252,587 India 4,080,294 13,242,789 16,329,565 United Kingdom 3,527,495 15,145,591 9,292,119 Japan 2,598,894 6,428,965 8,886,018 Taiwan 2,796,801 3,131,055 6,543,096 Malaysia 2,036,191 5,746,173 5,059,779 Poland 492,673 3,143,303 4,069,061 Hong Kong 352,834 2,340,071 3,744,859 NAICS: Metal Crown, Closure, and Other Metal Stamping (except Automotive) NAICS: Crown and Closure Manufacturing (until 2012)

15 Metal Stamping Imports Time Measures Country Value ($) Value ($) Value ($) World Total 486,649, ,233, ,752,113 Canada 190,132, ,357, ,666,322 Taiwan 128,663, ,148, ,561,135 Mexico 44,705,415 74,860,534 76,729,596 Korea, South 4,687,895 60,103,001 55,472,994 Germany 9,885,624 38,448,702 35,796,844 China 3,856,829 11,611,137 32,167,278 Japan 95,768,058 26,304,449 30,900,070 Spain 137,163 2,543,889 8,580,497 Austria 967, ,997 3,337,685 South Africa 11,993 30,198 3,074,187 Hungary 597, ,525,706 United Kingdom 1,160,462 3,506,320 2,206,446 Sweden 1,761, ,837 1,980,130 Italy 453,836 3,290,974 1,358,570 NAICS: Motor Vehicle Metal Stamping

16 Aluminum and Steel Tariffs What s Next? 107 House Republicans Wrote to President Opposing Unilateral Action Aluminum Association opposing unilateral action under 232 Undetermined term for tariffs Goal is to end tariffs early Educate White House, public, about manufacturing supply chain Building coalitions to make a difference Within 10 Days Establish an Exclusion Process Can request a product exclusion if: (1) lack of sufficient U.S. production capacity of comparable products; or (2) specific national security based considerations - Appeal process would include a public comment period on each exclusion request - Process completed within 90 days of an application filing - Commerce Dept. suggested President should raise tariffs on other countries, products if allows exemptions

17 Current State of Trade:

18 Retaliation by Trading Partners European Unions Materials List - Flat rolled non-alloy steel - Flat rolled stainless steel - Bars and Rods of Stainless and Hot-rolled - Containers, tanks, drums - Cast tube or pipe fittings - Self-tapping screws, rivet nuts, self-locking nuts - Open die steel forgings - Table, kitchen, household articles of steel European Unions Products List - Lipstick - Motorcycles/Mopeds - Recreational vessels, motor boats - Rice, OJ, Cranberries - Peanut Butter - Cigars, cigarettes - Water pipes for tobacco - Bourbon Whiskey China targeting U.S. soybeans South Korea filing a WTO complaint

19 Tariffs What One Voice is Saying and Doing

20 Questions? The Franklin Partnership, LLP Policy Resolution Group at Bracewell LLP