U.S. Will Approve Some Delays in Tariff Payments Amid Coronavirus Crisis

Date: Thursday, March 26, 2020
Source: The Wall Street Journal

Steel producers criticize efforts to delay or roll back tariffs

WASHINGTON—The U.S. says it will allow some importers to delay tariff payments, following calls from business groups and import-dependent industries such as retailers and steel users for the Trump administration to cancel or at least temporarily suspend major tariffs.

The tariffs—essentially taxes at the border—have been imposed on hundreds of billions of dollars of annual imports from China, as well as steel and aluminum products from around the world.

President Trump last week rejected the calls for tariff relief, and White House officials have continued to say tariff breaks aren’t on the table.

Yet in recent days U.S. Customs and Border Protection sent notices to companies saying officials will approve some delays in tariff payments. The agency, which collects duties on imports on behalf of the U.S. Treasury, in the past has granted companies more time for customs paperwork and tariffs due to a variety of extraordinary circumstances, including the effect of weather on seaports.

“Due to the severity of Novel Coronavirus Disease (COVID-19), U.S. Customs and Border Protection (CBP) will approve on a case by case basis additional days for payment of estimated duties, taxes and fees due to this emergency,” according to the notice from the agency.

The federal government is in touch with businesses on a variety of possibilities for assisting companies that face tariff burdens, a U.S. official said. Those efforts complement the Internal Revenue Service’s delays of tax-filing and tax-payment deadlines.

A group of Democratic senators is calling for a moratorium on paying tariffs for 90 days, with Sen. Dianne Feinstein of California circulating a letter for signatures. The call for a tariff delay drew a rebuke from the Coalition for a Prosperous America, a group that backs domestic companies and supports the Trump administration’s “America first” trade policy.

The U.S. government “should not reintroduce unfairly traded goods to cause American workers further economic pain because of lobbying efforts of stateless companies,” said CPA Chairman Dan DiMicco and CEO Michael Stumo in a letter, referring to multinational corporations. “China is stockpiling unsold goods right now during its shutdown and will be poised to flood the US market when shipping and ports reopen.”

Bloomberg News earlier reported the possibility that duties could be delayed for 90 days.

Meanwhile, a group of Republican senators on Wednesday sent a letter to Mr. Trump to ask for new exclusions to existing tariffs and a ban on new ones. “We urge you to consider a total moratorium on new tariffs or tariff increases for the time being,” wrote the senators, led by Finance Committee Chairman Chuck Grassley (R., Iowa).

Trade hawks close to the Trump administration see any tariff relief—even if temporary—as chipping away at the trade barriers that Mr. Trump promised during the 2016 election and unrolled starting in 2018. Peter Navarro, a White House trade and manufacturing adviser, has consistently denied that the White House will approve any tariff cuts.

Green-lighting broad tariff relief would also present a messaging problem for the White House, since Mr. Trump has repeatedly said U.S. tariffs are paid by foreigners. In fact, they are paid by U.S. importers and frequently passed down to consumers.

On Wednesday, domestic steel producers rushed to criticize efforts to delay or roll back tariffs, saying trade barriers are important to the steel industry and its workers.

“Any efforts to delay or reduce the collection of duties on unfairly-traded steel imports or imports that threaten to impair U.S. national and economic security will ultimately hurt U.S. workers and businesses during this unprecedented moment,” said the American Iron & Steel Institute and four other organizations.

Some imported steel products have several layers of tariffs at the U.S. border, including levies based on unfair dumping and subsidies, Mr. Trump’s broad metals tariffs based on a national-security law and also duties imposed on Chinese products in the trade war with Beijing.

In January, Washington and Beijing signed a “phase one” agreement that serves as a truce in the trade war, but the Trump administration kept duties on all products affected by the conflict, only lowering the tariff rates on some products.

The U.S. Chamber of Commerce and leading apparel and footwear groups have asked the Trump administration to remove tariffs.

“Having a tariff that is intended to punish China, but is being paid for by middle-America consumers who may currently be out of work, seems unfair at best and counterproductive,” said Doreen Edelman, head of global trade and policy at law firm Lowenstein Sandler LLP.

For the Trump administration, tariffs are an economic tool to support domestic industries as well as a lever to seek concessions from trading partners that discriminate against some U.S. products.

So far the White House has sought to keep its signature trade policy separate from broad efforts from the administration and Congress to provide financial support to American companies and individuals, according to people familiar with the policies.

Lawmakers are divided on the issue, but the Trump administration imposed its major tariffs without congressional consent and could also remove them unilaterally in response to political pressure or economic changes in 2020.

In a separate action last week, the U.S. Trade Representative also opened a new process for companies to request tariff relief for medical-care products of Chinese origin that may be needed to respond to the coronavirus pandemic. Companies have until June 25 to make requests. The process would allow the USTR to reconsider requests for tariff relief that were denied last year, when the need for medical supplies wasn’t as pressing. The USTR has already taken action to reverse tariffs on some medical supplies.