Peter Friedmann's
View From Washington D.C.
The Next President, Congress and Tariffs – Who Should We Worry About?
FBB Federal Relations, P.C.
September 2024
Six years ago, Trump put 301 tariffs on imports from China. Global uproar. Yet no opposition in Congress, either R or D. Trump lost reelection 2 years later, Biden could have terminated them, or just let them expire. But he did not. In fact, he actually prevented their expiration, choosing to extend them. So now we have had those tariffs for 6 years after Trump. Why? Because both Trump and Biden, and now Harris, recognize that protectionism, China-bashing, is widely popular with the electorate, especially with the union vote, which they are all courting.
These past 6 years have shown that while Trump might be the vocal ‘point of the tariff spear’, don’t be misled -- he and Biden/Harris share the protectionist/tariff objective. The trade community and economists know it’s terrible economics, but unfortunately, our political leaders seem convinced it’s good politics.
Bottom line, be prepared: regardless who is elected, our next President will be protectionist, and will continue to enjoy the support of Congress for tariffs, regardless of whether D’s or R’s will be in Majority. A concerning forecast, but one we’ve been watching these past 6 years. Those of us who understand the value of trade, have plenty of work ahead of us.
TOLD YOU SO? Sorry if the above – that both candidates are dangerous for trade - is alarming; but my job is to not be constrained by common wisdom and political preferences; 10 months ago at two non-political, non-partisan professional trade associations, you heard me set forth the possibility, even likelihood, that Trump or Biden or both, could be dropped from their party’s Presidential ticket. Plenty of doubters, since no ‘expert’ cable news ‘talking heads’ were even hinting at such a prediction. Well, today, Biden is no longer the D candidate (and we’re not at November 5 yet.).
Peter Friedmann
OurManInDC@FederalRelations.com
September 5, 2024
Where Can Bi-Partisanship Be Found on Capitol Hill? International Trade Policy
FBB Federal Relations, P.C.
August 2024
Even as the Presidential campaigns shift into high gear, Republican and Democratic Senators and Congresspersons are coming together, preparing for “China Week” -- a series of votes in late September on various China-related bills.
The objective of House Speaker Mike Johnson is to empower the next president to take tougher action against Beijing. The Senate is increasingly voicing a similar objective. These include a sanctions package, punishing Chinese military firms that provide material support to Russia and Iran, ratcheting down de minimis, and restrictions on US outbound investment in China.
The bills are expected to be brought for a vote individually rather than as a single larger bundle, which some on the Hill believe will help ease the process of passing bipartisan measures.
The bipartisan nature of the China focus is illustrated by current House support for White House initiatives: Foreign Affairs Committee Chair Michael McCaul (Republican-Texas) and Gregory Meeks (Democrat - N.Y.) both support President Joe Biden’s executive order which directs the Treasury Department to create an outbound investment screening mechanism.
Senate Finance Chair Ron Wyden (Democrat -Oregon) has just now unveiled a bipartisan bill to reform de minimis trade provisions, largely consistent with the End China’s De Minimis Abuse Act, bill that was passed by the Republican majority of the House Ways and Means Committee earlier this year.
It does not seem that either party is ready to end the de minimis program altogether, but they do agree that de minimis duty-free treatment should not be available for goods hit by trade remedy tariffs, such as 301 duties, or are on the USTR priority watch list for intellectual property theft or abuse, or are imported from any country that is categorized by the US as a non-market economy.
Stay tuned, more to come, but the main story is that when it comes to trade with China, Republicans and Democrats, Congress and the White House, are “on the same page”. So things will get done!
Peter Friedmann
OurManInDC@FederalRelations.com
August 13, 2024
Peter Friedmann's View from Washington DC
FBB Federal Relations, P.C.
July 2024
Can’t Beat’ em, then Join’ em: Amazon going into the Shein and Temu business – taking sellers’ inventory for non-branded goods, direct ship 9-11 days to customer. My take-away:
Congressional and CBP efforts to limit imports from China via ever-stricter UFLPA and deminimis enforcement, are not scaring importers. In fact, an ever- growing percentage of imports arrives outside traditional entry processes.
GSP on hold in Senate, waiting for AGOA. Behind the scenes: Senate Finance Committee Chair wants to wait to work out ‘concerns’ over AGOA renewal. My take-away. Despite this delay and partisan dispute over Trade Adjustment Assistance, GSP will be renewed by end of the year, and be retroactive. Industry GSP Letter
US Union Attack on Chinese Shipbuilding: $1,000,000 fine on every ship-call by a Chinese-built ship. My take-away. This would impose unwelcome new costs on imports and exports, as USTR Tai continues to support US labor union efforts to curtail imports. But I feel this will prove ‘a bridge-too-far’.
Detention/Demurrage OSRA – Carrier Petition to Postpone: Deadline for opposition comments is Monday – all trade community joins. Despite OCEMA Petition, virtually all carriers are actually implementing the new Rule. My view: FMC will reject this Carrier petition, but carriers will continue to try to undermine the Rule in Court. See Industry comments
Comment period on extension of 301 exclusions is expiring, My view: USTR will decline to extend the comment period. See AFT letter
After the Debate: What’s the trade policy question?: My view: Plenty of talk about who will be the Democratic candidate for President, so let’s focus on trade policy: Whomever are the candidates, Trump, Biden or someone else, will they be as eager as Trump and Biden have been to be “tough on China”?
Plenty on the trade plate, heading into the final months of this Congress.
Peter Friedmann
OurManInDC@FederalRelations.com
July 2, 2024
Peter Friedmann's View from Washington DC
FBB Federal Relations, P.C.
May 2024
This is a pivotal moment in international transportation and trade. Every four years as the Presidential and Congressional election year builds steam, we are assaulted by protectionist rhetoric. Already the two leading candidates, Biden and Trump, are competing to show who is the most protectionist, the most anti-trade. One threatens an across the board 10% duty increase on all imports, on top of existing duties, and that’s just to start. The other has a list of imports that he wants to hit with big duties – steel, aluminum, and how about a fee on many, even most cargo ships amounting to $50 per ocean container? As a side note, demonstrating the extent that campaigns can change candidates’ most fundamental beliefs, it is shocking, considering their positions not 12 months ago, our Presidential candidates are also competing to show who is tougher on illegal immigration, or pro-choice on abortion.
While those are not going to be issues debated on Capitol Hill before the elections, trade and transportation certainly are. Will Congress jump on the protectionist bandwagon? Is the effort to end, restrict or limit deminimis entries partly motivated by protectionist ambitions? Is protectionism a reason for Congress’ continuing difficulty renewing what was once a non-controversial quite limited helping-hand for less developed countries – GSP. Who is opposing the President’s proposed steel duties, the extruded aluminum duties? No one, not a Democrat, not a Republican. Over this summer as the elections near, more protectionist proposals will arrive on the Capitol Hill and White House doorsteps, count on it. It’s scant solace to know that the protectionism is very much bipartisan.
Meanwhile, the new Ocean Shipping Reform Act will impact every item that is imported into or exported out of this country - beginning May 29th! The new regulatory environment might lead to a more efficient supply chain at some point, there will be a period of adjustment. And Congress may be asked by industry and even the FMC for legislative clarification of certain OSRA policies. But adapting to the new shipping regulatory regime will be the least of our worries, if the ILA were to carry out the threatened strike and shutdown of all US ports from Maine to Texas.
Now we come full circle, in this election year. Politics can lead to bad trade policy and decisions, but politics can also keep trade going. Politics will motivate the President to prevent a coastwide longshore labor dispute that shuts down our trade and our economy just months before the November 5 election.
But history shows they will come to their senses; after the elections, the longer term perspective can prevail, and “bright ideas” sought by special interest groups, go back on the shelf…for four years. Or so we hope.
Peter Friedmann
OurManInDC@FederalRelations.com
May 9, 2024
Peter Friedmann's View from Washington DC
FBB Federal Relations, P.C.
February 2024
The trade community is attempting to advance trade priorities here in Washington DC, while navigating Congress’ top priorities during this election year.
The number one topic on every Member of Congress’s mind right now, during this election year is whether he or she keeps his/her job come November 4 and if they do, what kind of job it will be. Every Member of the House and about a third of the Senators are up for election. While there are a few retirements, almost all are seeking re-election. They may publicly complain about the dysfunction on Capitol Hill, but they rarely actually want to leave.
The number two topic on every Member’s mind, even those Senators who are not up for reelection, and even those who have ‘safe’ seats with no realistic challenge to their relection, is whether they will be in the Majority or Minority. Currently the Republicans have a razor thin majority in the House, while the Democrats have a razor thin majority in the Senate. Just one or two Members of the House or Senate lose their relection, and those majorities change. When the Majority changes, really everything changes. Committee and Subcommittee chairs are always Members of the Majority party. The Speaker of the House who determines what legislation will be considered (and what bills/amendments will not be voted on), is the leader of the Majority party. Similarly (although not precisely the same), the Majority Leader of the Senate has the power to decide what will be considered or not.
An example, particularly in Presidential election years, are impeachment inquiries and votes, of which we’ve seen several – Clinton, Trump, now Biden. The Speaker of the House and the Committee Chairs can either initiate or prevent any impeachment inquiries and votes. As we’ve seen, a Republican Majority has pursued impeachment vs Democratic Presidents (Clinton and currently Biden), while Democratic Majority has voted impeachment of Republican President (Trump). Particularly during a Presidential election year such as the one we are in now, impeachment becomes a tool campaign tool.
As example of the use of Select Committees to further partisan agendas: under Democratic Majority, the House established a Select Committee to investigate the invasion of the Capitol and the role of President Trump. As soon as the House Majority shifted to Republicans, that Select Committee was terminated. Replaced by the Select Committee on the Chinese Communist Party. In fact, the offices of the January 6 Committee were emptied, and entirely new staff of the “China Committee” moved in. The China Committee is leading inquiries into forced labor, trade practices, military and economic aggression, deminimis import processing, etc. While the Select Committees do not wield legislative authority, cannot advance legislation, they can and do conduct hearings, investigations which can lead to actual legislation advanced by the permanent or ‘standing committees’. The attention to deminimis by the Select Committee is now motivating or supporting further scrutiny of deminimis by members of the relevant standing committee (Ways and Means) which has legislative jurisdiction over this topic.
Currently, after their focus on getting re-elected and keeping or gaining the Majority, a few issues have risen to the top. Consistent with the election year, the issues getting legislative attention are those which are perceived as impacting the election results. Chief among these is Southern Border immigration. While Republicans and Democrats have, broadly speaking, had opposite views – Republicans/Trump pursuing strict immigration controls, Democrats/Biden reluctant to do so – that had changed, rather dramatically, in recent weeks. President Biden announced a more aggressive position, very close to the Republican position on immigration. Why the sudden change – the polling on immigration is clear, both Republican and Democrats see the same data – voters are concerned, and all politicians want to be on the ‘right side’ of this issue. Even now, an immigration bill is being negotiated, between Senate, House and the White House. The objectives are to gain some control over the massive and unregulated flow across the southern border, and to gain political campaign advantage.
Another topic where the polling data determines a similar position of both R’s and D’s is trade. Namely, the Trump China Tariffs, which President Biden chose to retain. In the approximately 6 years since first imposed, not one Congressperson or Senator, neither R nor D has offered any legislation, resolution, amendment to rescind or even reduce those tariffs. Tariffs are popular and never more so, than in an election year. For PCC brokers and forwarders, whose livelihoods are dependent upon imports and exports, the popular attacks on the international trade, pose a threat.
Foreign policy can be tricky and during an election year, many Members of Congress hesitate to navigate, for fear of alienating various US constituent groups. For this reason, for months, aid to Ukraine and Israel has been subject to these concerns, and stymied on Capitol Hill.
Today, the challenges by Iran to US forces, and US responses, and uncertainty as to possible spreading conflict, are capturing the press and public’s attention. While there are a few members of Congress who are already vocal, how the majority (both R’s and D’s) engages on this conflict remains to be seen.
What an incredibly fascinating (and dangerous?) time in our Nation’s history.
Peter Friedmann
OurManInDC@FederalRelations.com
February 4, 2024
Peter Friedmann's View from Washington DC
FBB Federal Relations, P.C.
November 2023
It is hard to know where to begin this month’s ‘View from Washington DC’. It almost seems that Washington DC, like the entire world, is spinning out of control. But let's try.
Mideast..Everywhere
Everywhere, the Mideast is top of mind. Thousands demonstrating, on Pennsylvania Avenue even inside a House Office Building. In the White House, it’s the President’s primary focus. On Capitol Hill, the Israel/Ukraine aid bill enjoys bipartisan (but not unanimous) support; Republicans are split over aid to Ukraine, and now the House Republicans seek to use it as a legislative vehicle to repeal funds destined to the Internal Revenue Service to increase tax collection capability. Support or opposition for the President’s engagement in the Israel – Hamas war is widely seen as determining many Congressional and even the Presidential races during the coming 2024 election year.
While currently the major focus of attention, it is only one factor in determining which party controls Congress and the White House. There are many more:
We now have too many ‘warring parties’: House versus Senate and the White House, Republican versus Democrat, Democrats versus Democrats, Republicans vs Republicans – yet they’ll try to pass a budget, to avoid a so-called ‘shutdown’ beginning November 18. The means of passing the various appropriations bills or at least a ‘Continuing Resolution” (to fund the govt at last year’s levels) is currently subject to ongoing, and largely out-of-the-public-eye negotiations between the warring parties. Fortunately, it currently appears that both the new Republican speaker as well as most in Congress (both parties) want to avoid a ‘shutdown’.
Will there be a shutdown?
The term ‘shutdown’ is very much misunderstood. In fact, wide swaths of federal responsibility will continue operating, including all military, both active and retired, all deployments and all the procurement; all entitlement programs such as Social Security, Medicare, Medicaid, food stamps, housing and other welfare programs will continue unabated. And many Federal agencies, including Customs and Border protection, Dept Homeland Security continue with their responsibilities. Yes, all Federal workers do get paid, just not on the normal paydays. They are all paid as soon as the shutdown ends. Perspective: since 1980 there have been 15 shutdowns, the longest 34 days. So we will get past this shutdown and for many (but not the lowest paid Federal employees who live paycheck to paycheck) it will disrupt their lives.
There’s been much “ado” about Republican efforts to find a new leader also known as Speaker of the House of Representatives. Again, not unprecedented. For example, while it took six votes of the House to identify Louisiana Congressman Mike Johnson, it once required 133 votes, over months, to agree on a Speaker Who is Mike Johnson? Will he be able to raise the funds that House Republicans need to have a chance to maintain their Majority., typically a responsibility of the Speaker. The Republican fundraising apparatus in Washington DC has already raised millions of dollars more in the 10 days since elected speaker, than he had raised in the 7 1/2 years he sat in Congress.
Congressman needs support.
So why was he selected when three others were rejected? Some believe it was because he had not been around here long enough to make the enemies that every leader always faces. -You know the old Washington, DC riddle: ‘want a friend here in DC….get a dog.) Another reason? apparently he’s just a genuinely nice guy, easy to get along with whether you agree with his policies or not. Speaking of policies, Mike Johnson is easily the most conservative Republican to assume the Speakers’ gavel; in many ways the legal and intellectual mind behind the most conservative positions on abortion, government funding, and States rights.
Up till October 7, when Hamas took hostages, the US-China relationship was top of mind: the House established a Select Committee on the Chinese Communist Party giving voice to a concerns of many: in Congress, both Republicans and Democrats, and in the Executive Branch at the implementation level. The Administration has been concerned about China's rapid global military expansion: Meanwhile china offers access to ‘Belt and Road’, access to Chinese markets and less expensive labor. and protecting US influence and access to rare earth minerals ,not only in the South China Sea but in Africa with and militarilily building up a Navy generally perceived as stronger and better equipped than the US Navy at least in the Pacific. et cetera.
Speaking of the Navy and mirror maritime commerce there has been concern that the Suez Canal through which could be threatened by the war in Gaza. However military and commercial experts point out the geographical distance between the Suez and Gaza the firm control of Egypt's military over Egypt, its border with Gaza and the Suez Canal commercial traffic, Monitoring that region with ware time eggorts.
The economic war?
So we are challenging China challenging and being challenged by China by imposing restrictions on US foreign investment into China commercial activities and we are eliminating chinas access to US consumers. We will allow existing exclusions from section 301 trump dash Biden tariffs against China imports, two expire meaning that there will be an increased scope of Chinese products that will be subject too often debilitating US import duties. New paragraph at the same time we are trying to keep China economy from collapsing and we realized the interdependence of China and US economic interests. So the president has invited President Xi to come and meet which he will do later this month in California. And President Biden has sent three cabinet secretaries to China thank you assure continued relations and communications it's not clear at this point whether China is our enemy or our partner. Another aspect of the globe that is going to be pivotal in coming years and is already challenging White House policymakers.
Much effort was put into passing the ocean shipping Reform Act in order to address the supply chain crisis and to assure fair treatment of US exporters, importers, customs brokers, freight forwarders, truckers. But the difficulty with legislation is that it must be implemented by a federal agency, in this case the federal maritime commission. The FMC is moving forward with rulemakings that are going to be pivotal for all including the ocean all these groups plus the ocean carriers and port authorities. Probably the most significant issue which is delaying the release of the new rule on detention and demurrage billing practices is the question of treatment of the middleman and truckers. Should they be held responsible for the payment of detention and demurrage charges? It appears now that the FMC is likely to issue the rule within a month by the middle of December and that henceforth detention and demurrage bills must be paid by the importer or continue. They can retain the customs broker or forwarder to process such invoices but they cannot be held responsible for the payment but the carrier cannot hold those middle men nor the trucker responsible for payment. Nor can the ocean carrier lock the trucker out of terminals or she refused to do business with the customs broker. Ultimately the responsibility for payment will be the importer or consignee or the exporter. Whoever has the contractual relationship directly with the ocean carrier. No longer will a “notify party” be considered as the “merchant” as set forth on the bill of lading. And we probably could not finish up this month view without a nod to the 2024 elections. This is because the world the world and the public are focused on so many other issues a few of which I've mentioned here, the 2024 elections are very very much on the minds of everybody in Washington DC on both ends of Pennsylvania Ave. Who much is at stake. What party will control the agenda in the House of Representatives and in the Senate? Who will occupy the White House and thus control the foreign policy and spending priorities of the United states? New paragraph it's common wisdom that the that president Biden and former president trump will be the candidates of their parties. In fact my own view is that neither will be nominated by their party as their candidate. Further karma a third party candidate can really move the needle in the 2024 elections specifically Robert Kennedy junior. As of this writing the latest polls show that trump and Biden would each get 30 about 35 or 36% and Robert Kennedy would get 25% of the vote and the presumption that because of his last name he would draw vote democratic voters away from Biden appears, according to preliminary polling, to be incorrect. His policies seem to be much more attractive to trump voters than Biden voters. New paragraph but it is still early days and since 1980 the individuals who lead in the polls on January 1 are not the ones who gain their parties nomination during the conventions. Remember Joe Biden was running 12th in Iowa primary Barack Obama was still unheard of in January of his election year Donald Trump was laughed at by the so-called wise people in the Republican Party in March and in August he he was the survivor and nominee of the Republican Party eventually going to the White House. Still very much on the minds of economist and of course the White House for whom is strong economy is the linchpin to his reelection or the election of any democratic presidential candidate. Interest rates are sky high many people especially young ones cannot afford to buy a house and Joe Biden the self professed “best friend labor has ever had in the White House” may be facing yet another large scale by newly motivated and empowered labor unions who have won historic wage increases. Each strike weakens the economy for a certain. And as we get closer to the primaries only a few months away now this the president cannot afford a weaker economy particularly as he is facing an uprising within within his own party due to his support of Israel against Hamas.
The bottom line we are in a massive state of flux not only home with policies and economics impacting the public but on Capitol Hill with political maneuvering and changes and in Foreign Relations everywhere we look Ukraine Russia China North Korea Israel Mideast kind of Africa. Perhaps this is a classic case of be careful what you ask for, you might get it” Joe Biden spent 35 years in the car in the Senate then eight years as vice president all grooming him for the presidency he waged a tough election campaign against Donald Trump to win the presidency. It did not come easy. But now that he's here with these unprecedented and almost universal challenges everywhere he looks, one wonders how he feels about yes last stop on his 60 year journey to the Oval Office.
Peter Friedmann
OurManInDC@FederalRelations.com
November 13, 2023