A New Twist To Trade Tariffs

THE SALES OF Chinese-made twist ties, of the sort used to seal a plastic bag or keep cabling neat, are so small to the United States, barely an estimated $4 million last year, that they do not show up as a separate line item in the trade figures.

However, the tariffs on them newly imposed by Washington are notable for another reason. It is the first successful application of countervailing trade tariffs in retaliation for currency manipulation.

Using trade law tools to address alleged currency malpractice has not been the norm in the United States. Furthermore, currency manipulation assessments have been the domain of the US Treasury, not the US Department of Commerce or the Office of the US Trade Representative. The Commerce department only assumed powers to sanction currency manipulation earlier this year, arguing that undervalued currencies harm US workers by allowing artificially priced imports.

The US Trade Representative, Robert Lighthizer, is an advocate of the approach. He has a Section 301 investigation into Vietnam for currency manipulation pending. That might have been intended as a dress rehearsal for a similar action against China in the Trump administration’s second term that now looks likely not to be.

The twist-ties ruling is preliminary. Final determination is due in February with the tariffs due to take affect in April. That leaves the matter sitting in the in-box of the incoming Biden administration in the United States.

However, the new US president’s team may be more preoccupied then with dealing with US tariffs on Europe’s proposed digital services taxes, led by France — unless the Trump administration’s trade officials can find some bigger trade issue with China to leave behind as they walk out the door.

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Filed under China-U.S., Trade

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