As Congress returns to DC after the holiday break, some are hoping that policymakers added “advancing trade policies” to their New Year’s resolutions for 2024. With the exception of export controls, major trade policy has faced an uphill battle over the last several years as this issue space has become increasingly divided and increasingly political. Both sides of the aisle have seen fairly significant shifts around trade policy, creating a number of hurdles for traditionally popular and easy-to-pass trade initiatives. This year will be critical for trade given how much is on the agenda and how much impact many of these policies have for U.S. companies. Here are four trade issues to watch in 2024:
Section 301 Tariffs: The Trump Administration initially implemented Section 301 tariffs on products imported from China. While some products successfully received exclusions from the tariffs, there has not been long-term certainty as the exclusions have generally been for one year (and then subject to extensions). A new comment period for products currently excluded opens on January 22nd, and current exclusions expire at the end of May. Furthermore, the products that are currently subject to tariffs do not have an exclusion process. While there is virtually no hope of the 301 tariffs being eliminated altogether, many companies are hoping for existing exclusions to beextended (preferably for a longer period of time) and other products to have access to a new exclusion process.
Generalized System of Preferences (GSP): GSP is a trade preference program that was created in 1974 to promote economic growth in the developing world. GSP provides opportunities for designated countries to export certain products to the United States, which has been a significant help to the economic growth of these countries and to the U.S. companies that are importing these products. Most importantly, the program has provided meaningful incentives for U.S. companies to diversify their manufacturing base. GSP expired at the end of 2020 – effectively preventing the tariff benefit from being realized by companies. There is some hope that Congress will retroactively re-authorize GSP this year, which would be a significant win for companies that have been operating without the benefits of their products being duty-free since GSP expired.
Miscellaneous Tariff Bills (MTBs): MTBs are temporary suspensions or reductions in duty for individual products. Like GSP, MTBs expired at the end of 2020. Since then, a new list has been developed, but legislation to advance that list has been unable to move. U.S. companies can benefit significantly should they have items on the list and there is some potential that if GSP is re-authorized, MTBs could be added to the package.
De Minimis Threshold: Imports do not face duties below a $800 – an amount set by Congress. For most of our allies and trading partners, $800 is very high and has posed a variety of issues to U.S. companies and retailers, not the least of which is the competitive advantage given to foreign retailers that ship directly to consumers. Additionally, there are concerns around the number of counterfeit products that are able to reach U.S. consumers due to the relatively high de minimis threshold. The House Select Committee on the Communist Chinese Party recently released a report that calls for the reduction of this threshold “with particular focus on foreign adversaries.” There is certainly some opposition to lowering the de minimis threshold, but companies (and some in Congress) view this policy as a meaningful solution - especially when it comes to China.
This will be a busy policy year, despite the election. While trade policy has complexities that often complicate the legislative process (including emerging geopolitical problems), there continues to be a strong coalition of companies to advance many of these issues. As policymakers look to the economy as a key issue in the election, trade could adjust its position on the 2024 agenda.