Newly proposed legislation aims to give U.S. companies a two-month warning before punitive tariffs are imposed on goods made overseas.
Congressman Brad Wenstrup (R-Ohio) and Congressman Mike Thompson (D-Calif.) last week introduced the bipartisan Fair Tariff Act aimed at changing the way the United States Trade Representative (USTR) enacts retaliatory duties. Under the law, the trade agency would have to give companies 60 days to land goods that are already in transit to the U.S. before new tariffs take effect. The law would also refund “goods on the water” duties paid by U.S. importers on the two most recent lists of punitive tariffs.
Following the 25-percent retaliatory tariffs on $200 billion in China-made goods imposed in May 2019, U.S. companies applied for “goods on the water” exemptions protecting them from paying the duties when their shipments arrived at U.S. ports. According to Reps. Wenstrup and Thompson, the same accommodation was not provided months later, when the USTR slapped 25-percent tariffs on European food, wine, apparel and other items from France, Germany, Spain, and the United Kingdom. Those tariffs were expanded in January 2021 to include even more items, with U.S. importers receiving just two weeks notice. The lawmakers claimed the government ignored petitions for “goods on the water” exemptions.
The Fair Tariff Act would give U.S. companies “fair warning” before future punitive duties take effect, Rep. Wenstrup said. “This bill will provide clarity and certainty for U.S. companies, so they are not surprised with a large tax bill on goods they ordered before tariffs were even announced,” he added. Tariffs represent an effective tool to compel foreign governments to address unfair trade practices, but legislation ensures that “our tariffs target foreign producers, as intended, rather than U.S. importers,” he said.
Rep. Thompson added that the bill aims to penalize foreign suppliers instead of the American importers who currently bear the brunt of the tariffs’ impact.
American “businesses, manufacturers, and jobs” should be protected from punitive tariffs, according to Rep. Adrian Smith (R-Neb.), Lead Republican on the Ways and Means Trade Subcommittee, who added that “giving small businesses ample notice of tariffs on their imported inputs is essential.”
The law would also help “to better equip U.S. importers to make purchasing decisions” from foreign suppliers, encouraging partnership with Fair Trade Agreement (FTA) partners and other ally nations. “The bill would also ensure USTR cannot rush to implement tariffs without giving U.S. companies adequate time to prepare, while also rectifying instances these tariffs have negatively impacted American businesses,” Smith said.
“As a member of the Ways and Means Committee I will continue to advocate for the Fair Tariff Act and other legislation that creates a more equitable trading system,” said Rep. Terri Sewell (D-Ala.), adding that the bill “modernizes” trade laws and makes tariffs “more balanced and fair” for workers and consumers.
“Our tariff policy has run amok over the past few years and this is a welcome step in the right direction,” American Apparel and Footwear Association (AAFA) CEO and president Steve Lamar told Sourcing Journal. “We should never make tariff decisions lightly, particularly since those imposed on U.S. imports of clothes, shoes, and travel goods fall hardest on U.S. workers and U.S. consumers.”
“This legislation can be strengthened by including all countries and including provisions to make sure U.S. tariffs that hit U.S. interests hardest are kept off the table,” Lamar added.