During an Aug. 5 hearing to explore proposed U.S. tariffs in retaliation for European subsidies provided to Airbus (Euronext: AIR.FP), most of the 31 total testifiers argued against the use of trade remedies.
“Every pound of metal we import supports downstream value-added manufacturing here in the U.S.,” said John Shay, president of Oak Brook, Ill.-based KME America, a copper and copper alloy products manufacturer. “The proposed tariff on metals would send a shockwave throughout the economy, harming not only our companies, but the tens of thousands of American workers along our supply chain and ultimately the millions of American consumers of the finished products.”
The Office of the U.S. Trade Representative in April released a preliminary list of EU products marked for tariffs of up to 100% and earlier this summer released a supplemental proposed list.
The interagency Section 301 Committee on Aug. 5 held a hearing at the U.S. International Trade Commission in Washington, D.C., to gather input from the public regarding products on the supplemental list, after a hearing in May explored products on the initial list.
USTR is undertaking a statutory process to identify EU products to which additional duties may be applied until the EU removes subsidies to Airbus that the World Trade Organization has found to be unfair, USTR said.
The WTO in May 2018 issued an appellate report stating the EU must end certain ongoing financial support for Airbus’ biggest passenger planes.
The U.S. requested authorization from the WTO to impose countermeasures worth $11.2 billion per year, commensurate with adverse effects caused by EU subsidies. A WTO arbitrator is evaluating those claims after the EU challenged the estimate and is expected to issue a decision this summer.
Nancy Rosenthal, CEO of Brooklyn, N.Y.-based Rotax Metals, which maintains a large inventory of copper and brass products, said many dimensions and sizes of the products Rotax sells that are on the proposed tariff list are not in the production range of U.S. manufacturing brass mills, or U.S. mills can’t meet quality specifications needed by Rotax’s customers.
Tariffs of 100% would double the cost of imported copper-based mill products from the EU and would allow U.S. copper mill companies to raise prices, Rosenthal said.
The supplemental list proposes tariffs to apply to products including those classified under Harmonized Tariff Schedule copper subheadings HTS 7407.10.50 (refined copper, bars and rods), HTS 7407.21.90 (copper-zinc base alloys (brass), bars and rods not elsewhere specified or indicated, not having a rectangular cross section) and HTS 7409.11.50 (refined copper, plates, sheets and strip, in coils, with a thickness over 0.15 millimeters but less than 5 millimeters).
In addition to metal companies, several food and beverage entities testified regarding the tariffs.
Any damage intended to be inflicted during a trade war should be aimed at addressing the root of the dispute, National Association of Beverage Importers (NABI) President Rob Tobiassen said during the hearing.
“Because this is a trade fight over subsidies and civil aircraft and not one dealing with alcoholic beverages, it is fitting and appropriate and proper, and does the least collateral damage, to apply the tariffs only to” certain aircraft parts, Tobiassen said. “Airbus has operations in the United States, where they do bring in products. There is sufficient aeronautic equipment coming in from the EU to address your concern and repair the competitive damage suffered by the aircraft industry in the United States.”
Rich Hudgins, CEO of the California Canning Peach Association, said peaches canned in the EU benefit from unfair subsidies and said if the U.S. ends up retaliating against the EU, 100% tariffs should be imposed on HTS 2008.70.20 (peaches (excluding nectarines), otherwise prepared or preserved, not elsewhere specified or indicated), HTS 2008.97.90 (mixtures of fruit (excluding tropical fruit salad), otherwise prepared or preserved, not elsewhere specified or indicated) and HTS 0811.90.80 (fruit, not elsewhere specified or indicated, frozen (including frozen peaches).
“Subsidized Greek canned peach prices have always underpriced California pricing by large margins,” Hudgins said. “Unfortunately, that differential has grown even larger over the last few years, because of the 25% Section 232 tariff on tinplate steel. While our U.S. processors have had to absorb the added tinplate steel cost, Greece and China had been free to enter their subsidized canned fruit with no such duty on their cans.”