Trade News as of 02/21/2019

USMCA: Mexico’s new government under President Andrés Manuel López Obrador is currently taking steps to ratify the new North American trade pact.  For further insight into the ratification procedure of USMCA for U.S., Canada and Mexico, click here. Current challenges that are delaying the ratification process include continued disagreement over U.S. tariffs on steel and aluminum imports for Canada and Mexico under Section 232 in the Trade Expansion Act of 1962.

The US Trade Representative released a notification that listed changes to the U.S. law needed to comply with the terms of USMCA. This release is a requirement set by Congress to expedite implementing legislation for US trade agreements.

US-China: A new round of trade negotiations between the two nations took place on Tuesday (2/19). The parties discussed structural changes to alleviate the trade imbalance to benefit both sides.  Click here for a timeline of the dispute.

Soybeans and tariffs: Bloomberg reports the long-term projections of soybean exports, as forecast by the U.S. Department of Agriculture, assuming China’s retaliatory tariffs are maintained. Fueled by record high production and trade issues, U.S. soybean exports may not reach its pre-trade war peak until the 2026-2027 cycle. Indiana is the fourth largest producer of soybeans in the U.S., and in 2018 yielded an 8 percent production growth in soybeans.

Auto Tariffs: On March 3, 2018, President Trump first announced the possibility of placing tariffs to European imported cars. February 17, 2019, the Commerce Department submitted a report to the White House, on whether auto imports pose a threat to national security. Based on the data, Trump has approximately 90 days to decide on invoking auto tariffs.

• The U.S. auto industry has pushed back saying that consumers will be impacted with higher prices, jobs will be at risk, and tariffs could trigger a reduction in U.S. investments that will be experienced for decades.
• The Japan Automobile Manufacturers Association also issued this statement.

WTO: The U.S. submitted a proposal to the World Trade Organization (WTO) that would reduce the number of countries designated as emerging economies, disqualifying them from special and differential treatment (S&D) as 'developing' nations. India, China and others are expected to push back on the proposal. WTO Chief Roberto Azevedo notes the complexity of settling this dispute, with no clear resolution in sight.