Escalating U.S. Tariffs: Affected Trade

09/12/2019

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Brock R. Williams and Keigh E. Hammond | Congressional Research Service

The trade practices of U.S. trading partners and the U.S. trade deficit are a focus of the Trump
Administration. Citing these and other concerns, the President has imposed tariff increases under three U.S. laws:

(1) Section 201 of the Trade Act of 1974 on U.S. imports of washing machines and solar products;

(2) Section 232 of the Trade Expansion Act of 1962 on U.S. imports of steel and aluminum, and potentially motor vehicles/parts and titanium sponge (the President decided not to impose tariffs on uranium imports, after an investigation); and

(3) Section 301 of the Trade Act of 1974 on U.S. imports from China. In May 2019, in response to concerns over immigration, the President also proposed an additional 5% tariff on imports from Mexico under the International Emergency Economic Powers Act (IEEPA), but subsequently suspended the proposed tariffs indefinitely citing an agreement reached with Mexico. For a timeline of recent actions, see CRS Insight IN10943, Escalating U.S. Tariffs: Timeline. The Administration has stated that it is using existing and proposed tariffs for a range of purposes, including as leverage for trade negotiations with affected trading partners, such as China, Japan, and the European Union (EU), and, as noted, to influence Mexico’s immigration policies. While tariffs may benefit a limited number of import-competing firms, they also increase costs for downstream users of imported products and consumers and may have broader negative effects on the U.S. economy, as well as several policy implications.

The multiple tariff increases applied to date, ranging from 10% to 45%, affect approximately 15% of U.S. annual imports. This amounts to $393.3 billion of imports using 2018 annual data; notably, the tariffs went into effect at various times in 2018 and 2019 (Figure 1). Section 301 tariffs on U.S. imports from China account for more than 90% of trade affected by the Administration’s tariff actions. While the Administration has taken some steps to reduce the scale of imports affected by the tariffs (i.e., by exempting Canada and Mexico from the steel and aluminum duties and creating processes by which certain products may be excluded), the general trend is an escalation of tariff actions. In the spring and summer of 2019, the Administration implemented and proposed a series of additional tariff actions, significantly expanding the share of U.S. trade potentially affected. In August, the Administration announced new Section 301 tariffs of 10% on approximately $300 billion of U.S. imports

tarrif trade

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