America’s New US President and International Trade: 5 Feb. 2021

The majority of Americans and many around the globe welcomed, on the 20th January, the arrival of US President Joseph R. Biden and the departure of Donald J. Trump and his “America First” policy. Since taking office, a barrage of Executive Orders has signalled Biden’s agenda, one that includes strengthened health care, improved climate change planning, scientific support to combat COVID-19, economic stimuli to address the turmoil caused by the virus, reformed immigration policies and reengaged ties with America’s global allies. Yet, a change some may have desired or expected in US trade policy could be less likely.

Notably, one of Biden’s initial tariff-related measures occurred on 1 February with the reinstatement of 10% tariffs on aluminium from the United Arab Emirates: duties Trump had removed the day before leaving office. Biden proclaimed the duties “necessary and appropriate in light of our national security interests….to help maintain or increase domestic production by reducing the United States’ reliance on foreign producers.” Additionally, the administration is not expected to rescind Chinese tariffs in the absence of a wide-ranging analysis of their economic effects. Biden, a Democrat, may be trying to demonstrate trade toughness to avoid the kind of out-manoeuvring that the Republicans and Trump unleashed on their opponents. The UAE-related move is discouraging to US and European business sectors that hope Biden will rescind 25% tariffs on steel and 10% tariffs on aluminium imposed by Trump (under §232 of the 1962 Trade Expansion Act) to allegedly combat Chinese overproduction and protect national security.

Although US importers may seek US Commerce Department tariff waivers on products not available from domestic suppliers, Biden noted “there have been 33 such exclusion requests for aluminium imported from the UAE…and the Secretary of Commerce has denied 32 of those requests. This indicates the large degree of overlap between imports from the UAE and what our domestic industry is capable of producing.” On 27 January, the EU ambassador to the US requested that Biden “immediately” lift tariffs on European steel and aluminium and offer, in return, the EU’s removal of its retaliatory duties on the US. But American unions and steel workers, along with primary US aluminium producers, are urging Biden to maintain the duties. Those desires will be weighed against Biden’s wish for better relations with Europe in order to combat climate change and unite in a common front against China’s ascendance, particularly with Biden having criticised China’s unfair practices and unchecked globalisation.

Considering America’s substantial duties and trade policy fluctuations, exporters to and importers in the US must continue to proactively and advantageously plan to minimise cross-border trade costs, to mitigate risks of US government audits and other enforcement activities and to maintain a strategic advantage.

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