November 2024 Volume 6

WASHINGTON UPDATE

the Trump administration will likely seek to avoid in order to expedite the imposition of tariffs on imports. A Section 301 pathway is possible, as are a few options under existing trade law that would allow the administration to bypass a lengthy government investigation. When a president calls for tariffs on imports, it can prompt several agencies and departments to initiate formal proceedings. These investigations can take anywhere from three to eighteen months, or even longer, which is why the Trump administration will likely use a combination of trade tools to move more quickly. President-elect Trump could initiate a Section 122 balance-of payments tariff under his authority in the Trade Act of 1974, resulting in an immediate additional 15 percent rate for 150 days unless extended by Congress. Under the same law, he may also have the ability to block the importation of certain products for a period of time, again without a public review process. Section 421 of the Trade Act of 1974 allows the president to impose temporary tariffs on Chinese imports in the event of a surge in shipments into the U.S. that cause market disruption for domestic manufacturers. Regardless of which trade provision is used to impose tariffs, President-elect Trump will face no shortage of options. China, however, has taken steps since the first Trump administration to lessen the impact of tariffs on its economy. Retaliatory tariffs from China, as well as from any allies subject to tariffs, are expected. China and the EU strategically targeted politically sensitive industries, often in Republican-leaning congressional districts and states, during Trump’s first term. The tariffs placed on U.S. exports to China covered goods ranging from steel and aluminum to vehicles, whiskey, and soybeans. In 2016, China sourced 40 percent of its soybean imports from the U.S.; today, that figure stands at just 18 percent, as Brazil has emerged as the largest supplier to China. Should Beijing impose tariffs on U.S. goods, exposure for Chinese industry is less significant today than it was in 2018 when the Section 301 tariffs first took effect. China is also taking extraordinary steps to evade tariffs by investing in manufacturing facilities in Mexico, allowing those products to enter the U.S. as "Made in Mexico" and thus avoid tariffs or duties. Forgers in the U.S., Mexico, and Canada are now competing with the Chinese government right across the southern border, an issue FIA will continue to press with the Office of the U.S. Trade Representative under President Trump.

FIA is well positioned to work with a second Trump administration and the new 119th Congress, which will convene in January 2025. In lobbying meetings on Capitol Hill and with the Biden administration, we have witnessed a significant shift in the perception of tariffs. Once viewed as a "protectionist" measure to defend domestic industry, under a second Trump administration, tariffs may become the bedrock of an offensive trade policy, providing U.S. manufacturers with a longer runway to compete against manufacturers subsidized by Beijing. Regardless of the trade tool used, President Trump will be ready to act on Day One.

Omar S. Nashashibi is the Founder of Inside Beltway, a nonpartisan lobbying and strategic consulting firm in Washington, D.C. Having worked in the nation’s capital for over twenty five years, Mr. Nashashibi provides strategic consulting services to companies while also lobbying the White House and Congress on behalf of manufacturing, associations, defense firms, nonprofits, and other sectors. He works with policymakers on trade, taxes, environmental and workplace regulations, supply chains, job training and identifying grants and funding to support projects. Having

started his career in Washington D.C. in 1996, Mr. Nashashibi worked for the Office of Management and Budget, a branch of the White House, a large multi state law firm, and founded a previous lobbying firm in 2005. He graduated from the George Washington University in Washington, D.C., where he studied Political Science and International Affairs.Washington, D.C. representing the Forging Industry Association. He can be reached at omar@insidebeltway.com.

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FIA MAGAZINE | NOVEMBER 2024 5