The Impact of Section 232 and 301 Tariffs: Hear insights about what's happening and what's to come

10/16/2018

We’ve heard from several clients lately who are wondering what will happen with tariffs. To get insights on this situation, we reached out to expert Carolyn Gleason, Head of the Global Regulatory Practice and International Trade Practice at McDermott Will and Emery in Washington D.C. who shared some outstanding insights. In our interview she sheds light on how the industry is reacting, what’s happening with appeals gain exemption, and what to expect for the future.

Industry reaction

According to Carolyn, there are different reactions from different industries that vary based on how they’re impacted. For example, in the farming sector there is less resistance since subsidies are helping to cover any impact to revenue. In other industries that are heavily impacted, companies are typically banding together to voice their opposition through organizations such as the Business Roundtable.  

Appeals for exemption

Companies that are getting hit hard by the appeals can submit an exclusion request with the Department of Commerce. When it comes to section 232, if the exclusion is granted, it will apply to the company that requested it, not the product category. About 35,000 exclusion requests have been filed through the end of September. As Carolyn mentioned in the interview, “Most have not been fully reviewed by the Department of Commerce and those that have, for the most part, have not been approved. This is a difficult process.”

For section 301, exclusion requests are submitted to the Office of the United States Trade Representative (USTR), an agency within the office of the white house. In these cases, any approvals will apply to the product category, not just the company or association that requested it. There have been about 2000 requests for these exclusions, and the USTR has yet to make a decision on any, but had a deadline of October 9 for requests, so we may see action on these forthcoming.

Future outlook

We’ve also heard that people are wondering how long these tariffs will continue and what to plan for the future. The advice in this interview is to expect this to be ongoing, even if political changes happen since tariffs are often favored by democrats.

As far as exclusions go, there may be a few granted, but its unlikely these will be significant. The DOC will be looking at whether the product is reasonably available in the United States or from other sources, and national security considerations. They’ll also be looking at disproportionate economic impact on the user.

The one circumstance that may bring about a partial or full rollback of these tariffs is if we see a pronounced drop in the markets. However, this becomes less plausible as time rolls on since the positions seem to be hardening.

We hope you find these sights helpful and if you’re interested in listening to the full interview, you can find it here.

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