U.S. medical device companies hurt by Trump's tariffs Presented by Semiconductor Industry Association

With help from Doug Palmer and Megan Cassella

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Quick Fix


— The U.S. medical device industry is feeling the pain of President Donald Trump’s trade war with China. And despite the Trump administration offering a process for companies to be excluded from the tariffs, critics say it’s long and difficult to navigate.

— U.S. Trade Representative Robert Lighthizer will meet with the nine-member USMCA working group this morning as the window is closing for the new North American trade pact to be ratified by Congress this year.

— The future of U.S.-Mexico sugar trade is unclear after a federal court vacated a suspension agreement the Commerce Department negotiated with Mexico in 2017. It is a loss for U.S. sugar producers who pushed for the deal.

IT’S WEDNESDAY, OCT. 23! Welcome to Morning Trade, where your host just finished binge-watching "La Casa de Papel" and strongly recommends everyone watch it and share their takes with me. Any new shows to take up my time? Or trade tips to share? Let me know: [email protected] or @sabrod123.

Driving the Day

U.S. MEDICAL DEVICE COMPANIES HURT BY TRUMP’S TARIFFS: As U.S.-China trade negotiations continue and the promise of a “phase one” deal looms, Trump’s tariffs are still in place on over $350 billion worth of Chinese goods — and they’re hitting the U.S. medical device industry, which has been forced to eat the costs or pass it on to consumers.

Trump has so far imposed duties on about $2 billion worth of medical devices and parts made in China, including big ticket items like MRIs and X-ray equipment as well as contact lenses and gloves.

That’s a problem for Peter Larson, the president and CEO of a small medical device company in Newark, Ohio. Larson has paid over $250,000 in new tariffs due to Trump’s trade war, and his appeals for relief largely haven’t worked, Pro Trade's Doug Palmer reports.

Problem with exclusions: USTR created a process for companies to apply for an exclusion from tariffs on products not readily available in the United States. But critics like Larson say USTR’s process is difficult to navigate and leads to many rejections.

Larson said he waited a year before receiving a letter in September saying his exclusion request had been granted, but the exemption only covered “about 3 percent of what we've been paying taxes on. And so instead of getting $250,000 back, I was going to get — the hell — $8,000 back. It’s nuts.”

LIGHTHIZER BACK ON THE HILL: Trump’s trade chief will meet again today with House Democrats tasked with securing changes to the USMCA, as some lawmakers begin to worry about a narrowing window to get the bill through Congress.

Ringing the alarm: Republicans are growing more concerned that USMCA will not get to the finish line in the 21 remaining days that Congress will be in session this year. Senate Finance Chairman Chuck Grassley said Tuesday that he’s “very worried for the first time, starting about now,” that the deal won’t be passed this year.

As Morning Trade noted Monday, the Trump administration must still put together and send to Congress the formal implementing bill to be considered after the working group and Lighthizer strike any deal that satisfies Democrats’ concerns.

Keep calm: House Majority Leader Steny Hoyer offered some optimism Tuesday that Congress has enough time to pass USMCA this year. It’ll just depend on if and when Democrats and Lighthizer strike a deal, he told reporters.

Asked if it was possible the House will stay in session longer to consider the USMCA, Hoyer said he didn’t want to “make that judgment at this point in time,” but “the time will be dictated by, of course, when, in fact, we get there.”

“We can accommodate getting our work done if, in fact, our work is ready to be done,” he said.

Pelosi-McConnell troubles: Tensions are running higher than usual between House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell as House Democrats get deeper into their impeachment inquiry, threatening slim hopes for legislating before the presidential election. McConnell on Tuesday noted: “I don’t have any advice to give her on [her internal politics], except I wish she’d pass USMCA and we could at least rack up a victory.”

THE USMCA PROCEDURAL TRICK THAT WASN’T: House Republicans growing antsy over the lack of movement on the USMCA urged their Democratic counterparts on Tuesday to suspend all impeachment investigations until after the House passes the trade agreement.

Reps. Debbie Lesko (R-Ariz.) and Rob Woodall (R-Ga.) on the House floor called for their colleagues to defeat — at least temporarily — an unrelated piece of legislation in order to amend it by adding a measure asking all relevant House committees to halt investigations “until such time as a bill representing the USMCA trade agreement becomes a law.”

“What it says in effect is, we have real legislative priorities that are not being met,” Woodall said. “Let’s stop the nonsense, let’s stop the partisanship and let’s focus on some things that every single citizen in this country cares about.”

No dice: The House voted along party lines to move forward anyway, prompting a fresh round of critical tweets from Republicans. “Again, they’ve chosen to put a partisan political agenda over legislation that would make life better for the American people,” House Ways and Means ranking member Kevin Brady wrote.

CONFUSION AFTER COURT THROWS OUT U.S.-MEXICO SUGAR DEAL: The future of sugar trade between the U.S. and Mexico is unclear after a U.S. Court of International Trade ruling on Friday that voided a suspension agreement negotiated by the Commerce Department and Mexican sugar growers in 2017.

"The court decision delivers a serious rebuke to the Commerce Department,” said Louis Leibowitz, a trade attorney not directly involved in the case. “They were required by the statute to keep a log of meetings concerning the negotiation of the suspension agreement and they failed to do it.”

A Commerce spokesperson said the department "would take all actions required by the law" to implement the ruling. He referred questions about whether the Trump administration would appeal the decision to the Justice Department, which declined to comment.

UNCLEAR IF E-COMMERCE DEAL CAN BE REACHED BY JUNE: WTO Deputy Director General Alan Wolff was cautious on Monday about the chances of around 80 WTO members reaching an e-commerce agreement by the upcoming ministerial meeting in June in Nur-Sultan, Kazakhstan. “I think the e-commerce negotiations are going to be successful,” but they may not be ripe for conclusion by then, Wolff said.

“There are still hard issues,” including how to handle concerns about privacy and what rules should govern the “free flow of data” across borders, he added. One priority for many countries is to include the WTO’s 21-year-old e-commerce duty moratorium in whatever plurilateral pact that is reached. That is especially important because the full WTO membership may not agree to extend the moratorium when it expires in December, Wolff said.

GROUPS MAKE INTERNATIONAL CALL FOR CUTS IN EXCESS STEEL CAPACITY: Nineteen steel industry associations in North and South America, Europe, Africa and Asia on Tuesday called on governments to step up efforts to reduce global excess steel production capacity. But one country seen as the primary culprit was conspicuously absent from the group: China.

“Unfortunately, effective reductions in capacity and concrete actions to remove government measures that distort markets, including raw materials markets, have not been adequate to date,” the associations said. “Efforts by governments to eliminate practices that lead to excess capacity should be redoubled.”

U.S. groups including the Steel Manufacturers Association and the American Iron and Steel Institute were joined by producer organizations from Europe, Latin America, Canada, Mexico, India, Brazil, Turkey, Japan, Russia, South Korea, South Africa and Ukraine.

Trade Remedy Corner

COMMERCE WALLOPS CHINESE ALUMINUM WIRE: Imports of aluminum wire and cable from China face final anti-dumping and countervailing duties ranging from 33 percent to 166 percent, the Commerce Department said Tuesday. The United States imported about $115 million of the good in 2018, down from $157 million in 2017. The International Trade Commission is expected to make its final decision on the case by early December.

Hmm, what’s with all the “bent” rebar from Mexico?: The department also said it was initiating an investigation into whether companies are circumventing anti-dumping and countervailing duty orders on steel rebar from Mexico by bending the product “at one or both ends.” A group of U.S. producers, including Nucor Corp. and Steel Dynamics Inc., called for the probe. The U.S. imported about $51 million of the rebar from Mexico last year.

International Overnight

— POLITICO takes a look at what the search for a site to host the G-7 summit usually looks like.

— Britain takes another Brexit baby step, POLITICO reports.

— Kelly Ann Shaw, Trump’s G-7 and trade adviser, will leave the White House after months on the job, Reuters reports.

— Cheap Brazil beans threaten to derail China’s return to buying U.S. soybeans, Bloomberg reports.

THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: abehs[email protected]; [email protected]; [email protected]; [email protected]; and [email protected]. Follow us @POLITICOPro and @Morning_Trade.

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