President Trump and U.S. Trade Policy

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please consult with your own legal counsel for such advice. Also, do not rely on this information without performing your own research.
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Key Tenets of Trump Trade Policy
• Focus on the bilateral trade deficit in
manufactured goods
• View that America has been cheated
for years by trading partners
• Skepticism of effectiveness of multi-
party trade agreements
• Focus on enforcement of our trade
laws
Source:https://www.nytimes.com/2018/04/06/us/politics/trump-trade-
policies.html

Key Tenets of Trump Trade Policy
• Focus on driving new business
activity and investment to the
United States
• Pursuit of trade cases at the WTO,
but public criticism of WTO dispute
resolution process and ability of the
organization to confront certain
practices
• Strong political alignment with Rust
Belt producers
Source:https://www.nytimes.com/2018/04/06/us/politics/trump-trade-
policies.html

NAFTA 1.0
Source: http://www.businessinsider.com/natfa-news-negotiations-us-mexico-
canada-deal-trump-2018-4
Source: https://fas.org/sgp/crs/row/R42965.pdf
Source: https://www.bizjournals.com/atlanta/news/2018/02/07/nafta-
negotiations-hold-dramatic-implications-for.html
• Provided for:
• Non-discriminatory market access
• Investment opportunities and protections
• Ability to compete for major government
procurement contracts
• Created:
• Value-saving supply chains across all three
countries
• Chains included suppliers and component
manufacturers
• Ties to major manufacturing operations
• Without NAFTA, U.S. goods would face an
average tariff of 7.1% in Mexico and 4.2% in
Canada (and higher for some products)

NAFTA 2.0
• UPS advocacy focused on
ensuring an updated NAFTA
meets the realities of modern,
cross-border trade,
particularly in an era of
e-commerce

NAFTA Update
• Negotiations have proceeded along dual
track: Modernization elements alongside
more unconventional proposals (e.g., sunset
provision, procurement, ISDS, rules of origin)
• Opportunities: More efficient border
procedures, digital trade provisions (including
e-documentation, e-signatures), potential for
higher de minimis levels
• Challenges: Toughest issues remain, including
several controversial U.S. proposals (e.g.,
sunset clause, auto rules of origin, ISDS opt-
in), need for Congressional passage, ongoing
withdrawal threats, Mexican presidential and
U.S. mid-term elections
Source: http://www.businessinsider.com/natfa-news-negotiations-us-mexico-
canada-deal-trump-2018-4
Note: ISDS – Investor-State Dispute Settlement

• Possible outcomes:
• Status quo as talks continue into
2019 due to political calendars
• Congress approves revised NAFTA
with trade modernization
enhancements
• NAFTA 2.0 also could include (if the
U.S. gets its way):
• Higher % origin content requirements
• Parties must opt-in to Investor State Dispute
Resolution
• State-to-State Dispute resolution panels
acting only in an advisory capacity and/or
• Sunset provisions
• Withdrawal from NAFTA 1.0 with or
without a new NAFTA in place

Consult with trade professional to understand
potential duty impact to components/materials
purchased in NAFTA countries as well as
finished product sold within NAFTA countries
Explore other mechanisms to minimize duty
exposure, such as:
 Duty Drawback
 TIB’s & other Chapter 98 provisions of HTSUS
 FTZ’s
Prepare now,
stay informed,
and be ready
for quick
execution
Note: TIB – temporary import bond; FTZ – foreign trade zone

China in the Spotlight
Administration focus on:
• U.S. $375 billion trade deficit in
goods in 2017
• Made in China 2025 industrial
policies
• China’s intellectual property
practices
• China’s other trade and
investment tactics
https://www.thebalance.com/u-s-china-trade-deficit-causes-effects-
and-solutions-3306277

• Section 301 Investigation: In August 2017, the Trump Administration launched an
investigation into Chinese forced technology transfer and intellectual property theft. Based on
findings, the Trump Administration has announced:
– additional tariffs on imports of products supported by China’s unfair industrial policy;
– intent to file a World Trade Organization case against China’s technology licensing
practices; and
– Treasury Department to propose restrictions on Chinese investment in sensitive U.S.
technology
• Retaliation Concerns: Direct and indirect
Source: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/august/ustr-announces-initiation-section
Source: https://www.forbes.com/sites/douglasbulloch/2018/04/11/china-is-not-defending-free-trade-so-much-as-its-own-
right-to-subvert-it/#54c372735172

3April
May 1 31
5
U.S. Administration: Tariff
package targets:
• 1,300 high-tech products
• $50B in imports.
China “reciprocates” with its list:
• 106 products
• $50B in U.S. exports to China
• 25% add’l tariff
U.S. Trade Rep. asked to consider more
tariffs:
• $100 billion more products
• Total $150 billion
• 2017 U.S. exports to China were
$130B
Deadline for
Public
Comments on
Tariffs
Public Hearing at U.S.
International Trade Commission
in Washington
Post-
Hearing
Rebuttal
Comments
Due
Issuance of
Final U.S.
Tariff List
11 15 22
4 301
TBD
Source: https://www.cnbc.com/2018/04/06/china-will-not-hesitate-with-major-response-to-new-tariffs-ministry-of-commerce.html
Source: https://www.lexology.com/library/detail.aspx?g=e8105036-41a9-41a7-9c8f-8b88580ea005

• Will the two countries sit down, negotiate, and identify the specific actions by a certain date?
• If China trade war averted, what would the trade peace look like??
• Will U.S. seek systemic reform or a reduction in the trade deficit?
• Reckoning with China’s development model/industrial policies
• President Xi’s political advantage of “president for life” vs the U.S.’s mid term elections (and presidential term
limits)
• What to learn from Korea and the Korea – U.S. Free Trade Agreement (KORUS)?
• President had threatened withdrawal multiple times
• Reportedly, President Trump was about to impose steel and aluminum tariffs on Korea
• The two sides reached agreement on updates to the pact.
Source: https://www.cnbc.com/2018/04/06/china-will-not-hesitate-with-major-response-to-new-tariffs-ministry-of-commerce.html

New Korea –U.S. Free Trade Agreement (KORUS) Outcomes
• U.S. Administration addressed large trade deficit in goods, particularly in autos
– 25% U.S. tariff on Korean trucks to be extended until 2041
– Korea to double the number of U.S. auto exports (50,000/year)
• Meet U.S. safety standards vs Korea’s
– Korea agreed to harmonized emission testing requirements
– Korea to recognize U.S. standards for auto parts
• Customs Improvements: Korea agreed to principles for conducting verification of origin of
exports under KORUS and will establish a working group to monitor and address issues that arise
• Pharmaceutical Reimbursements: Korea will amend its premium pricing policy for global
innovative drugs to provide fair treatment for U.S. pharmaceutical exports
• Exemption from Sec. 232 Steel Tariffs: Korea steel imports will be subject to a product-
specific quota equivalent to 70% of avg. annual import volume for 2015-2017
Source: https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-fulfilling-promise-u-s-korea-free-trade-agreement-national-security/

17
China Implications
• Increase the cost to some specific China-made products
• Potential duty impact if full range of HTS numbers are assessed
Sec 301 duties
– Validate the classification
• Sourcing alternatives
– Price accordingly or alter your supply chain
• Use of specific mechanisms to help alleviate negative impact:
– E.g., temporary import bond, duty drawback, FTZ
• Exports to China
• Potential duty impact if China assesses retaliatory duties on all
proposed commodities
• Validate the classification
• Consult with Trade professional to identify potential impact
• Stay informed and be prepared to execute new plans
immediately

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Korea Implications
• New procedures on origin verification
• Assist in importer’s compliance process
• Benefits and challenges to industry
• Benefits to Pharma
• Benefits to Automotive
• Challenge to Steel importers
• Consult with Trade professional to identify
potential impact
• Stay informed and be prepared to execute new
plans immediately

How can I get involved: A checklist
1. Submit comments as part of the Federal Register process
https://www.federalregister.gov/documents/2018/04/06/2018-07119/notice-
of-determination-and-request-for-public-comment-concerning-proposed-
determination-of-action (301 comments due TOMORROW – May 11)
2. Educate your employees
3. Call, write, visit your elected officials

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President Trump and U.S. Trade Policy

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