US Section 301 tariffs set to trigger fresh wave of trade disruption

If there is a thread that provides coherence to Donald Trump’s mad emperorship, it is the frenetic invention of new, evermore dramatic diversions: no week can be allowed to pass without new melodrama that erases the chaotic melodramas of weeks past. Nor can a week be allowed to pass without the seeds being sown for next week’s melodramas. This week it is Iran, and the computer-gaming unreality of a scorched-earth US-Israeli bombardment that has generated convulsions across economies in the Persian Gulf. After dropping billions of dollars’ worth of ordnance on Iran, Trump “totally demolished” oil refining facilities on Kharg Island – but “may hit it a few more times just for fun”. But the invasion has served its purpose. The distraction has diverted the world’s media from the tragic conflict in Ukraine and the dire crises persisting in Gaza. Even Venezuela, Greenland and the improbable Board of Peace have seemingly disappeared from view. The Jeffrey Epstein files? Immigration and Customs Enforcement shootings? All boring old news. The fresh seeds of next week’s distractions are being sown on another of Trump’s favourite disruptive pastimes – not an assault on Cuba which is maybe being queued for later – but on trade and tariffs. They are seeds that will be highly relevant during next week’s World Trade Organization Ministerial, along with the start of US negotiations with Mexico and Canada over renewal of their trilateral trade agreement. After the US Supreme Court ruled Trump’s “Liberation Day” tariffs to be illegal, prompting a marvellous legal storm over how billions of dollars of tariffs will be refunded, US Trade Representative Jamieson Greer has unveiled a slew of Section 301 investigations intended to seed a whole new generation of tariff income for federal coffers. New tariff wars may not quite provide the drama of bombs falling in Lebanon or Tomahawk missiles flattening a girls’ school. However, for millions of businesses involved in international trade, the investigations will generate angry passions and fresh trade uncertainties. Separate batches of “301 investigations” have been announced – one targeting 60 economies seeking to punish trading partners that have failed to maintain or enforce meaningful restrictions on forced labour, and another targeting 16 economies, intended to identify “structural excess capacity”. Many believe these new tariffs are in reality all about China. Indeed, China is named on both target lists. But there are other very good Trumpian reasons for seeding them. First, it enables his tariff team to move quickly on from the embarrassment of the unconstitutional International Emergency Economic Powers Act tariffs in place since last April. Second, the Section 301 tariffs have been tried and tested over five decades, and will be much tougher to challenge. Once in place, they last for four years and can be extended and amended without congressional interference. Since they focus very generally on “relief from unfair trade practices”, they can cover a host of sectors. They also provide very dependable outcomes, since they allow the US administration to act as investigator, prosecutor, judge, jury and executioner. The Financial Times’ Alan Beattie calls them “show trials”. Observers already see pharmaceuticals pricing and digital services taxes being added to the queue. Alongside the slew of Section 232 tariffs aimed at protecting national security – the favoured weapon of former US Trade Representative Robert Lighthizer – they can be expected to provide the main planks underpinning Trump’s future tariff regime. The main drawback of 301s is the procedures needed to implement them. That is why the two sets of investigations are being introduced with indecent haste: the written comment period for the excess capacity case runs from March 17 to April 15, with hearings scheduled for early May. Any post-hearing rebuttals are due within seven days. The aim is to have new tariffs in place before July 24, when current temporary tariffs expire. Section 301 investigations can take between one and several years to conclude. Unsurprisingly, Greer’s announcement triggered uproar among targeted economies and threats of retaliation. The European Union said it will respond “firmly and proportionately”. It is likely to threaten to renege on the trade deal reached with Trump last summer. Malaysia’s recently signed US trade deal was also in limbo, after a minister declared it “null and void”. Canadian Prime Minister Mark Carney sarcastically welcomed US concerns to protect labour practices, adding: “We stand by our adherence to Canadian law.” His recent call for Canada and other middle powers to cooperate in opposing the hegemonic weaponisation of trade continues to reverberate as he courts leaders worldwide with the aim of diluting Canadian reliance on the US economy. While Hong Kong (named in the investigations) has yet to comment, Beijing called the US investigations “extremely unilateral, arbitrary and discriminatory, and a typical protectionist act … We urge the US side to immediately correct its wrong practices [and] meet China halfway”. The 301 issue is certainly one of multiple reasons why Trump’s state visit to Beijing has been postponed. The official alibi is Trump’s preoccupation with Iran. The reality is that a host of trade-related disagreements would make such a high-profile meeting dangerously contentious. At heart, we have been reminded that tariffs and trade wars remain at the very core of Trump’s “America first” agenda, and it is not just China that is in the crosshairs.

US Section 301 tariffs set to trigger fresh wave of trade disruption

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The White House’s Section 301 investigations may be less dramatic than war, but they risk retaliation and trade breakdowns

The White House’s Section 301 investigations may be less dramatic than war, but they risk retaliation and trade breakdowns