Election, Tariffs & Trade

While we anxiously await the results of the election, we also need to keep calm and carry on with business. At WSSA, we have been working with our colleagues on Capitol Hill and industry associations to get the best read on the impact of the results and predictions for the lame duck session.

CBMA:  The House Ways and Means Committee is in charge of tax legislation, and Democrats maintaining the House majority means that the leadership of this committee should remain the same, which is generally good news for CBMA. Getting CBMA to the floor for a vote during the lame duck session may be impacted by the final outcome of the Presidential race and the “mood” in Congress. It is likely that we will remain dependent on Sen. McConnell to put forth items for the vote. We encourage all of you to continue to keep pressure on your Congressional reps, and especially those of you in Kentucky!

EU-Digital Services Tax:  There was a reprieve on the potential retaliatory tariffs against France in July, when France agreed to defer tax collections from US Tech firms. The DST tax remains in play, as many EU countries are now imposing DST Taxes and France has suggested it could move forward with assessing a DST tax on USA firms in January. The OECD (Organization for Economic Co-Operation and Development) is continually hosting negotiations with countries on this topic to develop a multi-lateral agreement. As these taxes greatly affect USA companies, we do expect further threats of retaliatory tariffs under a Trump administration, or a negotiation approach under a Biden administration.

US-UK talks and BREXIT:  Thanks to all of you who attended our webinar on the EU and UK trade issues on Wednesday November 4. The webinar was recorded and please let us know if you would like a copy. As discussed in the webinar, the US and UK are in the fifth round of talks on a free trade agreement and we expect that negotiations will continue once the election crisis calms down.  These talks have been a top priority for the Trump administration but will not be completed by the end of the year. If we transition to a Biden administration, we will expect a pause in the process but it will be picked up again quickly. As for BREXIT, the UK will leave the Customs Union of the EU on December 31, 2020 and we are all anxiously awaiting whether there will be a “deal” with the EU or if we will be in “no-deal” territory. Many changes are forthcoming and we are working one on one with all shippers to answer questions and prepare for all scenarios.

WTO Boeing–Airbus cases:  As you all know, the U.S. has imposed duties on $7.5 billion worth of EU goods, with many beverage alcohol products on the retaliatory list based on the ruling in the Airbus case. The next official review of the tariffs is slated for February 2021. In the meantime, we have been watching the updates on the pending publication of a list of USA products that will potentially be hit by retaliatory tariffs based on the WTO decision in the Boeing subsidy case. The EU has waited to proceed, delaying from the October 26 date until after the USA election.   It is expected that the list will be published on or about November 10, and it is now being reported that the tariffs could go into effect the day following the publication of the list. We have also heard that the tariffs may be postponed should Biden be declared the next President as the expectation is that Biden will be less likely to retaliate with additional tariffs on EU products. We will keep you all closely advised and for those of you with pending exports of beverage alcohol to the EU, stay tuned.

Should tariffs go into immediate effect after publication, we do expect that exemptions will be available for goods in transit, but there is very limited information available at this time. WSSA is part of a coalition of key industry associations signing on to a press release warning that new tariffs will further damage the transatlantic drinks trade and pushing for a return to the negotiating table. 

There is a lot going on and we are here to answer any and all questions you may have. 

Happy weekend and happy waiting….