U.S. Trade Representative Robert Lighthizer said the administration is "looking at" an exclusion process for 10% tariffs on $200 billion worth of imports from China but failed to offer any specifics beyond that. An exclusion process allows U.S. businesses to request exemptions from tariffs on a specific good.
At a hearing before the House Ways and Means Committee Wednesday, Lighthizer downplayed the effects of the third tranche of tariffs due to China's alleged currency manipulation. China devalued its currency since the 10% tariff was imposed in September 2018, according to Lighthizer. As a result, "the effect has been less significant than fully 10%," he said.
Tariffs were scheduled to rise to 25% after March 1 until President Donald Trump delayed the hike. If tariffs rise to 25%, Lighthizer said he was committed to having an exclusion process. "Short of that, I want to see where we are," he said.
Lighthizer did not specify if or when the tariffs might rise to 25%. And if they do increase, details on when the administration would develop a process for businesses to apply for exclusions were similarly lacking.
The sentiment of low impact from tariffs doesn't seem to resonate in the business community. Numerous companies have reported headwinds and eroded margins due to the third round of tariffs.
Rep. Judy Chu, D-Calif., mentioned iRobot, which has a business presence in her district and manufactures its Roomba vacuum in China. "They are very, very anxious for having some way to apply for exclusions, and I hope that you can make that process happen," she told Lighthizer.
Reps. Jackie Walorski, R-Ind., and Ron Kind, D-Wis., along with 167 additional members of Congress, sent a letter to the USTR in October requesting exclusions for the third tariff tranche. "The lack of such a process for this most recent list is a glaring omission, particularly given its size in relation to the first two lists," the letter stated.
Walorski reintroduced the letter during the hearing and asked for a timeline on creating an exclusion process. She pointed to the most recent spending bill, which instructed USTR to establish an exclusion process for the third round of tariffs within 30 days of its signing.
Lighthizer did not directly answer whether USTR would meet this deadline. "I understand there are people in Congress who want us to have an exclusion process," he said.
The lack of specifics has been a theme throughout the U.S.-China trade negotiations, with those involved in the talks citing "progress" but revealing few details.
"We are making real progress," Lighthizer repeated during his prepared remarks at the hearing. He pointed to "substantial progress" related to banking, electronic payments and other non-tariff barriers that have prevented the U.S. from competing on a level playing field with China.
Negotiators have also discussed currency manipulation extensively, along with intellectual property (IP), he said.
Still, Lighthizer's tone was speculative of whether the parties would come to a deal at all. Nearly every time he mentioned a trade deal, it was with the caveat of "if" there is an agreement. "There's no agreement on anything until there's an agreement on everything," Lighthizer said.
He also implied a trade deal would not solve all problems between the U.S. and China, and other issues were bound to arise in the future.
"Let me be clear," Lighthizer said, "much still needs to be done both before an agreement is reached and, more importantly, after it is reached, if one is reached."
He reiterated the importance of enforcement if and when a trade deal is reached as a way to hold China accountable for the structural issues discussed during negotiations.
"If we do all of those things and it’s not enforceable, then it’s not very valuable," he said.
What exactly enforcement looks like, however, is up in the air.
In a series of questions, Rep. Earl Blumenauer, D-Ore., asked if enforcement meant more tariffs across the board, to which Lighthizer replied, "I'll talk to you offline."
