Trade & Tariff Update #27 - CAPE, Section 301 Hearings Begin & More

Mixed Reviews for CAPE 

Since its April 20 launch, deployment of the Consolidated Administration and Processing of Entries (CAPE) system for tariff refunds continues with mixed results.  While some companies have reported that the system is accepting entries, others have been unable to file claims.  More than 75,000 claims covering 11 million entries have been submitted so far, with reports indicating that 15% have been rejected.  The system currently only accepts entries for unliquidated entries, and although the general sense is that the system is working, much will depend on when filers receive refunds and how the second phase for duties that have already been liquidated works.

Section 301 Hearings Begin   

The Administration began hearings last week on the Section 301 investigation into forced labor practices in a wide range of countries.  More hearings are planned this week on the claim of excess capacity against China, the E.U., Japan and 16 other countries.  These investigations are part of a process to replace the illegal IEEPA duties with more durable tariffs under Section 301.  The Administration has indicated it will have a new Section 301 framework in place by mid-July when the current Section 122 temporary duties expire. 

President Trump Continues the Use of Tariffs as a Foreign Policy Tool 

The Administration’s continued reliance on tariffs to advance foreign policy objectives has also resulted in further unpredictability.  President Trump’s threats last week to impose 25% duties on automobiles from the E.U. highlight the importance of its role in the excess capacity investigation.  Moreover, the refusal of multiple countries to support actions against Iran have angered the President and demonstrated his willingness to use tariffs against parties notwithstanding existing trade deals and an economy challenged by fuel price spikes.  While tariffs seemingly remain a constant threat, it remains to be seen if the most recent pronouncements will be imposed (unlike prior threats that never materialized). 

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