November 2022 Volume 4

WASHINGTON UPDATE

Engaging FIA Members on Tariffs By Omar S. Nashashibi

TheForging IndustryAssociation (FIA) is undertaking amembership mobilization campaign to convince the Biden administration to keep the 25 percent tariffs on Chinese forgings in place. The Biden administration announced that it will accept public input from supporters and opponents of the tariffs on Chinese imports, through an online portal open fromNovember 15-January 17. This is a prime opportunity to have the voices of American forgings heard in Washington, D.C., and FIA members will receive a notice in November and December to take action and tell the Biden administration to keep the tariffs on China. On October 12, 2022, the Office of the U.S. Trade Representative (USTR) announced it will start a new docket to accept public input about the effectiveness and impact of the Section 301 tariffs on Chinese imports and the U.S. economy. The Biden administration continues to debate internally on how to approach China and the tariffs imposed by former President Trump. The law requires the federal government to conduct a four-year review of the 25 percent tariffs on roughly 6,800 imports from China and 7.5 percent on approximately 3,200 Chinese products. USTR is seeking public comments to consider the effectiveness of the actions in achieving the objectives of the Section 301 action, which sought to counter China’s intellectual property theft and forced technology transfer. They are also asking the public what other actions “would be more effective in obtaining the elimination” of China’s actions and the effects of the action on small businesses. In addition, trade officials want to knowabout the effects of the tariffs on U.S. supply chain resilience and on domestic manufacturing, including in terms of capital investments, domestic capacity and production levels, industry concentrations, and profits.

The pressure is intensifying in Washington, D.C. from those opposing the tariffs and pushing the Biden administration to lift or suspend the Section 301 action on Chinese imports. Government officials began debating this summer whether to lift some of the tariffs, restart an exclusion process suspending the action on some imports, or continue as is with all tariffs in place. While few believe the White House would lift all 10,000 tariffs on China, President Biden himself approved of an exclusion process this summer that USTR has yet to restart. The FIA succeeded in convincing the Biden administration to maintain the tariffs on imports, including forgings, while USTR conducts a full review. This summer, roughly a dozen FIA member companies filed formal comments with government officials at the request of the association in an effort to convince the USTR to maintain the tariffs long-term. FIA is now calling on its members to increase those efforts from this summer and file as many public comments as possible with the USTR to support the continuation of the Section 301 tariffs on imported Chinese forgings. FIA needs government officials to hear directly from manufacturers in addition to the lobbying effort and stakeholder comments the association will file on behalf of the industry. The more forgers that file comments, the clearer it becomes to decision-makers that the industry has the domestic capacity, technical ability, and willingness to fill orders and bring manufacturing to the U.S. At the recent FIA conference inWashington, D.C., a member asked, who would ever think it is a good idea to increase manufacturing imports to the U.S. by lifting tariffs on China? Unfortunately, the response is thousands of OEMs and Tier I businesses, in addition to retailers and others who believe lifting tariffs will lower inflation. One of the questions posed to stakeholders is whether the tariff action has achieved its stated goal, in this case, China ceasing its intellectual property theft and forced technology transfer. Most agree Beijing continues business as usual, however, recent data shows that imports from China of goods subject to the 25 percent tariff are 22 percent lower than in June 2018, when the previous administration imposed the Section 301 action. Those goods with a 7.5 percent tariff are only 3 percent below their pre-tariff levels, all this is according to data compiled by the Peterson Institute for International Economics. This not only validates the need to keep a higher tariff rate on imported forgings from China. In July, an FIA member testified along with FIA President Jim Warren before the U.S. International Trade Commission in support of continuing the tariffs and stated an increased rate to 50 percent would better protect the domestic industry.

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FIA MAGAZINE | NOVEMBER 2022