December Proves to be Busy Month for Trade Policy in the U.S.

As 2019 drew to a close, several updates involving U.S. trade policy made headlines, including a deal on the modified United States-Mexico-Canada Agreement (USMCA), the implementation of more steel and aluminum tariffs, and phase one of a trade deal with China.

USMCA Deal

After more than a year since the U.S., Canada and Mexico came to an agreement on a new trade deal to replace the North American Free Trade Agreement (NAFTA), House Democrats and the White House agreed on new terms for the USMCA.

Kathy Krafka Harkema, codes and regulatory affairs manager for the American Architectural Manufacturers Association, responded to the agreement with optimism.

“The U.S., Canada and Mexico each represent a significant export market for the others. In the case of the United States, some 2 million U.S. manufacturing jobs depend on trade with Canada and Mexico, according to the National Association of Manufacturers,” she says. “Once ratified by each country, the new USMCA will offer opportunities for continued growth for manufacturers, including those in fenestration and glazing
manufacturing and their supply chains.”

She continues, “A lot has changed in terms of trade, technology, manufacturing and exporting in the past quarter of a century. The USMCA will help strengthen intellectual property rights provisions and copyright privileges, while also addressing modern digital technology aspects of trade. The updated agreement language will help companies protect their significant investment in innovation, brands and overall business.”

Steel and Aluminum Tariffs

President Trump announced in early December that tariffs would be restored on steel and aluminum from Brazil and Argentina in response to the countries devaluing their currencies. Both Brazil and Argentina were exempt from the original Section 232 tariffs imposed in March 2018, which placed a 25% tariff on steel and 10% tariff on aluminum. However, Brazil’s steel industry and Argentina’s steel and aluminum industries were given quotas on how much could be imported into the U.S. on June 1, 2018 as part of their exemption.

According to the Washington Post, steel and aluminum exports represent approximately $700 million in Argentina and Brazil’s steel exports to the U.S. account for approximately $2.6 billion.

Aluminum Extruders Council president Jeff Henderson told USGlass magazine that his organization opposes the announcement.

“Since its inception, the Aluminum Extruders Council has opposed the 232 tariffs on aluminum imports from market-based economies. This regressive tax on consumers is injuring U.S. aluminum extruders at a time when the market is slowing and foreign imports are rising. This announcement is clearly a step in the wrong direction,” he says.

The Window and Door Manufacturers Association (WDMA) also strongly criticized the announcement.

“This sudden action could result in price increases for window, door and skylight manufacturers and create further uncertainty in the residential and commercial construction markets,” says WDMA president and CEO Michael O’Brien.

Trade Deal With China

Organizations in the glass industry were hopeful after the announcement of an agreement between the U.S. and China on what the government called a phase one trade deal that cancelled tariffs set to go into effect December 15.

The office of the U.S. Trade Representative (USTR) released a statement saying that they had reached an “enforceable agreement” that “requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services and currency and foreign exchange.”

The agreement cancelled a 15% tariff on additional goods imported from China that was to take effect in December (Tranche 4B) and reduced existent tariffs from 15% to 7.5% on about $150 billion in goods (Tranche 4A).

In exchange, Chinese officials agreed to accept several terms, including expanding U.S. imports by $20 billion on several goods such as manufactured and energy goods over a two-year period.

The agreement, however, does not remove the 25% tariff enacted on over $250 billion of goods that include the majority of products significant to the fenestration industry, which are a part of Tranches 1-3.

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