Commerce launches massive tires case

With help from Ximena Bustillo

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Quick Fix

— The Trump administration has launched one of the biggest trade remedy cases in years on imported tires from four Asian nations, which could result in steep tariffs as high as 220 percent. The case is already drawing bipartisan support.

— Congress could vote on a pair of resolutions to withdraw from the WTO in late July. If the resolutions are considered, it would be the first time lawmakers are forced to go on the record on the U.S.’s WTO membership since 2005.

— President Donald Trump is planning to reimpose tariffs on imported aluminum from Canada later this week if Ottawa doesn’t agree to quotas on its exports of the metal. It could prompt retaliation from Canada just days before the USMCA goes into effect.

IT’S WEDNESDAY, JUNE 24! Welcome to Morning Trade, where we’re wondering if any other opera houses or large venues will perform for plants in coronavirus times. I’d love to see a theater full of plants watch a movie. Any trade tips to share? Let us know: [email protected] and [email protected].

Driving the Day

COMMERCE LAUNCHES MASSIVE TIRES CASE: The U.S. Commerce Department on Tuesday initiated a major trade remedy case that could lead to steep anti-dumping and countervailing duties on close to $4 billion worth of tire imports from four Asian countries: South Korea, Vietnam, Thailand and Taiwan.

Commerce will also investigate whether Vietnam’s currency practices effectively subsidize its tire exports. That’s a new area of inquiry for department officials, who recently approved a policy change related to currency.

ITC is first up: The case must clear an initial hurdle at the U.S. International Trade Commission for the Commerce Department to continue its investigation. That vote will take place on July 17.

By the numbers: Thailand exported $1.96 billion of the tires last year to the United States, followed by $1.17 billion from South Korea, $469.6 million from Vietnam and $373 million from Taiwan. The United Steelworkers filed the petition, asking for antidumping duties ranging up to nearly 220 percent on tires from Thailand and somewhat lower amounts for the other suppliers.

Bipartisan support: Sens. Rob Portman (R-Ohio) and Sherrod Brown (D-Ohio), along with nine of their colleagues, released a letter Tuesday supporting the case.

The United States has already imposed anti-dumping and countervailing duties on tire imports from China. “Unfortunately, other foreign competitors are employing unfair practices to gain market share in the U.S. while Chinese tire imports face additional duties,” the senators said.

CONGRESS COULD VOTE ON WTO WITHDRAWAL IN JULY: The House and Senate parliamentarians have ruled that Congress can vote on a pair of resolutions to withdraw from the World Trade Organization in late July.

That’s good news for Sen. Josh Hawley (R-Mo.), who has been pushing for Congress to withdraw from the global trading body and needed to check with the parliamentarian on whether a vote could be held, given the timing in which he introduced his resolution. Now, Hawley is entitled to a vote on a motion to proceed to his resolution on the first day the Senate is back from recess.

Bigger picture: The decision means lawmakers will be forced to go on the record either in favor of or against withdrawing from the WTO, which the Trump administration has frequently accused of being unfair to the United States. Plus, the Republican Party’s growing suspicion of trade under Trump’s leadership could set the stage for a big congressional debate over continued U.S. membership.

U.S. lawmakers have not voted on WTO membership since 2005, when the House defeated a withdrawal resolution 86-338. Five years earlier, a similar resolution failed by a 56-363 vote. The Senate has never voted on withdrawal.

Reality check: It’s unlikely both the House and Senate would approve a resolution to withdraw. Even U.S. Trade Representative Robert Lighthizer, who has called the WTO “a mess,” has stopped short of calling for withdrawal and has acknowledged the body needs to be reformed — not torn down.

SOUTH KOREA JOINS RACE FOR WTO’S TOP JOB: South Korean Trade Minister Yoo Myung-hee is expected to formally announce her bid today to become the WTO’s next director-general.

Yoo became minister for trade, industry and energy in March, the first woman to hold the position. She was previously deputy minister for trade negotiations and a trade diplomat.

Keeping count: Once South Korea formally nominates her, Yoo will be the fifth official candidate vying to succeed current chief Roberto Azevêdo. The other candidates are from Mexico, Nigeria, Egypt and Moldova. The deadline for nominations is July 8.

AFRICAN COUNTRIES START LINING BEHIND NGOZI FOR WTO DG: The Economic Community of West African States, which is made up of 15 member countries, has endorsed Ngozi Okonjo-Iweala for the WTO’s top job.

Mahamadou Issoufou, chairperson of the ECOWAS Heads of State and Government, in a statement, called on other African countries and non-African countries to support her nomination. Issoufou also noted that an African has never served as the global trade chief.

Heavy-hitter: The endorsement is the latest reminder that Okonjo-Iweala is a strong contender for the job. She’s a former finance minister and World Bank No. 2 who European officials consider a formidable opponent to any EU contenders like trade chief Phil Hogan.

‘A BAD HORROR MOVIE’: TRUMP’S TARIFFS ON CANADA MAKE A COMEBACK: The U.S. is telling Canada to impose quotas on its aluminum exports, or else it will reimpose a 10 percent tariff on aluminum from Ottawa as soon as this week, multiple people familiar with the issue told POLITICO.

Hold off on the Champagne: If Trump moves forward with the tariffs, it would reignite tensions with Canada and likely prompt retaliation just days before the USMCA enters into force.

Multiple people called the decision “bad timing,” with one saying it’s a “classic Trump method of leverage” to do it days before a big event like the USMCA taking effect on July 1.

“Bringing back these tariffs would be like a bad horror movie,” said Neil Herrington, senior vice president for the Americas at the U.S. Chamber of Commerce.

Can Trump even do it? Jennifer Hillman, a senior fellow at the Council on Foreign Relations, on Tuesday noted that it’s unclear if Trump can use Section 232 to reimpose the tariffs. She cited a U.S. Court of International Trade case that found that the statute “does not provide ongoing authority to impose tariffs.”

Simon Lester from the CATO Institute agreed that it’s unclear if new tariffs would be permitted under the terms of Section 232, despite the U.S.’s May 2019 agreement with Canada allowing for a snapback of tariffs.

“The further along we are in terms of the timeline, and the more arbitrary the administration’s actions seem, the better the chances of a successful court challenge,” Lester wrote on Twitter.

Who wants this?: The push to reimpose tariffs stems from two U.S. primary aluminum producers — Century Aluminum and Magnitude 7 Metals, which argue that an increase in aluminum coming from Canada has led to plummeting aluminum prices.

Lighthizer said in a Senate Finance hearing last week that there were recent surges in imported steel and aluminum, “substantially from Canada, some from Mexico,” that was of “genuine concern” to the administration.

Widespread opposition: But the broader U.S. aluminum industry, represented by the Aluminum Association, has pushed back and urged the Trump administration not to impose tariffs or quotas.

Aluminum Association President Tom Dobbins earlier this month said “imports of primary aluminum from Canada today are consistent with long-term trends” so there is not a “meaningful surge” that would require U.S. action.



SENATORS CALL FOR QUICK VOTES ON EX-IM NOMINEES: Senate Banking Chairman Mike Crapo (R-Idaho) and ranking member Brown on Tuesday called for full chamber votes on two languishing nominations for the Export-Import Bank’s board of directors: Paul Shmotolokha, a Republican, and Claudia Slacik, a Democrat.

“If you say you are concerned about China, you should support filling Ex-Im’s board so our manufacturers can better compete with China,” Brown said at a committee oversight hearing with Ex-Im President and CEO Kimberly Reed.

Competing with Beijing: China, whose “export finance activity is larger than all the other export credit agencies in the G-7 combined,” according to Ex-Im, continues to be one of the biggest competitors.

“I agree with you that we need to fill the entire board and I would like to see us move as quickly as we can on these nominees,” Crapo said in closing. “There is a significant amount of obstruction on the floor of the Senate these days, but I will continue to push for these nominees to be moved forward.”

DEMOCRATS GO AFTER TRUMP’S TRADE RECORD: The Democratic National Committee on Tuesday released an ad slamming Trump, saying his trade policy, specifically his trade war with China, has hurt American farmers. The ad is part of a campaign in the six figures that will target swing voters nationally and in battleground states like Pennsylvania, Wisconsin and Michigan, Democrats said.

“Trump said he’d get tough on China. He didn’t get tough; he got played,” the narration in the video says.

International Overnight

— Egypt’s WTO candidate says the rules-based trading system is at serious risk of collapse without a major effort by nations to repair it, POLITICO Pro reports.

— Former Vice President Joe Biden’s presidential campaign is restricting its staffers’ and volunteers’ contacts with foreign officials, POLITICO reports.

— The European Union is pushing ahead with a digital tax despite U.S. resistance, a top official says, POLITICO reports.


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