Washington Insider -- Friday

Push Back on Calls for Tariff Relief

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

DOT Issues More Hours of Service (HOS) Regulatory Relief Including For Livestock

The Department of Transportation (DOT) issued a declaration waiving hours of service (HOS) requirements for commercial vehicle drivers transporting a host of goods.

Much attention is on the items on the list including medical supplies and equipment related to the testing, diagnosis and treatment of COVID-19. But the order also applies to supplies and equipment needed for community safety and the mention of goods like food, paper products and other groceries for emergency restocking of distribution centers or stores, the provision covering “immediate precursor raw materials — such as paper, plastic or alcohol — that are required and to be used for the manufacture of essential items is the most important for agriculture.

The Livestock Marketing Association said they have received official interpretation from the office of the Transportation Secretary that livestock is considered to be one of the “immediate precursor raw materials” and thus is covered by the expanded March 18 declaration.

Farm Bureau Keeps Pushing on H-2A Workers

U.S. agriculture remains focused on labor shortages amid COVID-19 as the U.S. State Department shut down processing of new H-2A visa requests in Mexico.

The agency said it would continue to process requests from those considered to be “returning” workers – those that have had H-2A visas previously. However, it is not clear how many H-2A applicants fall under that category.

The American Farm Bureau Federation (AFBF) held a call Wednesday, highlighting the situation.

In 2019, around 35,000 H-2A workers came into the U.S. during the first quarter of the year, AFBF officials said with the number of workers arriving in the second quarter rising – 34% of H-2A workers entered during the second quarter with another 30% in the third quarter.

Washington Insider: Push Back on Calls for Tariff Relief

Bloomberg and others are reporting this week that hardly a day goes by right now without business groups calling on the White House to suspend tariffs on Chinese goods in an effort to help them stem the growing challenges faced by the U.S. economy.

For example, on Wednesday, Americans for Free Trade, a group of more than 160 business associations, urged the administration to consider relief from duties as one of the emergency measures the administration is rolling out. “These tariffs are taxes that Americans pay,” the group said.

Hours later, the President publicly slashed those hopes. “There’s no reason to do that. China is paying us billions and billions of dollars in tariffs,” he said. “I can’t imagine Americans asking for that.”

Over the course of his presidency, the administration has imposed tariffs on a total of more than $400 billion in goods, ranging from Chinese apparel imports and French cheeses to European aircraft.

Economists say those duties are either absorbed by companies or added to the price tag for U.S. consumers, meaning “they’re not paid by China as the White House often claims.”

Complicating the matter is that many of the same small- and medium-size enterprises such as retailers or manufacturers that were hurt by the administration’s tariff battles also are now suffering from the economic fallout of the coronavirus outbreak, Bloomberg says.

Business representatives admit it’s not clear that targeted tariff cuts would have a significant impact on the broader economic outlook “but eliminating their levies certainly wouldn’t hurt,” they said.

Behind the scenes, the discussion about tariff relief has for weeks caused heated debates among administration officials as well as outside allies, including lawmakers. Larry Kudlow, the White House economic adviser, has been among the most vocal aides to make the case for relief, Bloomberg said – although a White House spokesman denied that Kudlow was making the case for tariff relief.

The American Iron and Steel Institute on Tuesday also warned of the potential negative consequences from tariff cuts. “The coronavirus epidemic is exacerbating the global glut in steel production and threatens to unleash a new surge in imports into the United States, which would be devastating to the American steel industry and our national security,” the group argued in letters to lawmakers.

Despite its reluctance to cut tariffs, the administration has moved quickly to exempt a range of products that are essential to the U.S. coronavirus response. The Office of the U.S. Trade Representative in recent weeks has granted exclusions for face masks, gloves and other medical supplies that are solely sourced in China.

Still, rhetoric has become more hostile between the U.S. and China recently, Bloomberg notes. The president has shifted from praising Chinese President Xi Jinping for his prompt containment of the virus to blaming the world’s second-largest economy for spreading the disease, which he now calls the “Chinese virus.”

In a recent report the New York Times said that the coronavirus outbreak “is prompting a heated debate among lawmakers and the White House over whether the Trump administration should remove the tariffs it has imposed on China and other nations to provide some economic relief.”

Supporters of lifting the tariffs, even temporarily, say it would be a simple and immediate way to help U.S. businesses and consumers struggling with higher costs from the president’s tariffs on foreign steel, aluminum and more than $360 billion of Chinese goods. These are “chipping away” at profits for companies that depend on imported goods and parts, slowed business investment and weighed on households, particularly those on the lower end of the income scale.

However, China hawks warn that the Chinese government and businesses will take advantage of any pause in tariffs to capture a larger share of global industries, putting Beijing on a dominant course for years to come.

Some argue that the tariffs are impeding the ability of American hospitals and doctors to respond to the coronavirus, since China produces a large share of the medical goods and supplies used in the United States, the Times said.

Leading business groups including the U.S. Chamber of Commerce, the National Association of Manufacturers and the U.S.-China Business Council have pressed the administration to roll back tariffs permanently as part of its emergency economic response.

Scott Kennedy, a China expert at the Center for Strategic and International Studies, said that some Chinese companies might try to take advantage of market dynamics by cutting out competitors, but that, on the whole, China’s recovery would be helpful, rather than harmful, for restarting economic growth worldwide.

“In sum, the world should welcome a recovering Chinese economy but simultaneously be vigilant against a possible jump in uncompetitive behaviors,” he said.

So, we will see. Clearly, the COVID-19 outbreak is sharply increasing economic pressure on the global economy and the increasing trade tensions appear likely to exacerbate economic headwinds for most exporters. These trade and economic policy debates should be watched closely by producers as they intensify, Washington Insider believes.

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@dtn.com