Washington Insider -- Wednesday

Administration to Defer Tariff Payments

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

Final WOTUS Definition Published By EPA, US Army Corps

The final definition of Waters of the U.S. (WOTUS) has now been published in the Federal Register and will become final June 20, 2020.

However, lawsuits are expected to come with Earthjustice saying they will challenge the matter in court.

“Trump’s EPA is taking advantage of a pandemic to covertly gut water safeguards. Under the cover of COVID-19, the Trump administration is giving extractive and polluting industries the power to dig up and destroy wetlands and to dump waste in streams, lakes, and wetlands all over the country,” said Earthjustice attorney Janette Brimmer. “We will see them in court.”

USDA’s Perdue to Address CFTC Meeting Wednesday

The Commodity Futures Trading Commission (CFTC) will hold a public meeting today (April 22) via teleconference of its Agricultural Advisory Committee.

The panel will hear from USDA Secretary Sonny Perdue during the session, which will focus primarily on the COVID-19 situation and the impact on ag markets.

While noting the impact that the COVID-19 situation is having on agriculture, CFTC Chairman Heath Tarbert also said, “The CFTC’s Livestock Market Task Force is monitoring activity around major, market-moving events, and will continue engaging experts, regulators, and market participants. Ensuring our markets are working for American agriculture is critical to fulfilling the CFTC’s mission during these challenging times.”

Washington Insider: Administration to Defer Tariff Payments

Bloomberg is reporting this week that, amid the intense debate over federal virus relief measures, the administration will allow “deferral of duty payments in hardship cases.” Larry Kudlow, White House economic adviser said that the U.S. will temporarily suspend certain tariff payments in an effort to help industries such as “retail” that are facing liquidity issues because of the coronavirus crisis.

“In some cases the customs duties--the excise tax you pay on the import – will be lifted if there are hardship cases,” Kudlow said. “In particular, there’s a lot of concern about retailers and related supply chains getting into the United States.”

The three-month deferral of payments, which was first debated inside the White House a month ago, only covers so-called most-favored nation tariffs and doesn’t apply to any of President Trump’s enforcement actions, including tariffs he’s imposed on roughly $360 billion in Chinese goods or steel and aluminum imports from around the globe, Bloomberg said.

“It’s a significant action. We want to help folks, it’s a way of helping out certain industries,” Kudlow said, but added that it was “not an enormous action” and doesn’t change the president’s trade policies.

Kudlow had noted earlier that a deferral for certain duty payments was ruled out because it was too complicated to administer.

White House deliberations on whether to defer payments and for which tariffs would be reduced were influenced by “outside voices on both sides of the debate,” Bloomberg noted somewhat cryptically.

Domestic manufacturers have argued for weeks that any relief for importers would create an unequal playing field at a time when industries in the U.S. are facing difficult times as well.

“The administration should not have tried to hide this decision by announcing it on a Sunday evening,” said Thomas Conway, president of United Steelworkers International. “Instead, the president should have made the announcement himself, during the light of day, so he could explain why he would do something that runs so antithetical to his claimed priority to Buy American, Hire American.”

Retail groups, on the other hand, said the action was helpful – but doesn’t go far enough to address the problem and ensure that jobs can be saved during this crisis.

“While the deferral of select duty payments is helpful and warranted, the deferral of all duty payments for at least 180 days would do even more to assist retailers as they navigate this unprecedented pandemic,” said Brian Dodge, president of the Retail Industry Leaders Association. “Millions of jobs are on the line, and we urge the administration to consider further duty relief to help retailers put workers back on the payroll when this crisis abates.”

Kudlow on Monday also conceded that the duties for imported goods are paid by American companies and not China, as President Trump often claims. “Yes, tariffs are paid by the companies importing, yes U.S. companies, with a minimum impact, frankly, on consumers.” He said the economic benefits of the phase-one trade deal between America and China “far outweigh” the economic cost of tariffs Trump has imposed.

The recently announced shift in tariff payment policy has been under consideration for some time, the New York Times said recently.

Also, tariff relief is supported by a number of groups, the NYT said. For example, in a statement last week, Myron Brilliant, the head of international affairs at the U.S. Chamber of Commerce, said tariff relief would provide some welcome breathing room for American businesses and consumers. “Liquidity has emerged as one of the top challenges for businesses of all sizes, and tariff relief would alleviate some of that strain.”

However, groups that supported the administration’s levies from the beginning continue to insist that any removal would be ruinous for industries like steel that depend on the protection.

So, we will see. The administration’s “get tough” trade policies continue to have both political supporters and opponents, but the large-scale economic interventions likely will lead to growing questions about policies that are accused of increasing consumer prices and dampening demand, debates producers should watch closely as they intensify, Washington Insider believes.

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