RAIMONDO STEELS FREE TRADERS FOR TARIFF DECISION: Biden hosted another meeting of White House economic officials on Friday about the tariffs, though some key policymakers, such as USTR Katherine Tai and Commerce Secretary Gina Raimondo, weren't even in D.C. That day he told reporters once again that he hasn't made the decision which tariffs to lift yet, and that officials are going through them "one at a time." Asked again on Sunday about the issue, Biden said the administration would be "having further discussions on that." The Friday meeting was one of a half-dozen we know about in recent weeks concerning the tariffs, including one-on-ones with proponents of broad tariff relief like Raimondo and Treasury Secretary Janet Yellen. But on Sunday, Raimondo appeared to prepare business groups who have argued tariff cuts would help fight inflation for disappointment. "Lifting tariffs isn't going to bring down top-line inflation in a very significant way," she said on NBC's "Meet the Press." "What it will do potentially is help consumers on certain, as you say, household goods. And so for that reason, given where inflation is, I think it could make sense to do it." That aligns with our recent reporting that the White House is considering immediate tariff relief for a narrow set of goods — perhaps $10 billion out of $370 billion affected — while reopening the exclusion process and announcing a new tariff probe on China's subsidized tech sectors. And the tariffs that are lifted are broadly expected to be consumer goods, ideally where voters will notice price cuts. Biden's decision is expected by many this month, although the exact timing is far from clear. "We are briefing him and I expect he'll make a decision shortly," Raimondo said. Wild card: A much-anticipated call between Biden and Chinese President Xi Jinping still hasn't been scheduled, but Secretary of State Antony Blinken said over the weekend that he expects the two leaders will have the chance to talk "in the weeks ahead." Administration officials stress that the call between the leaders is unrelated to the tariff decision, but some trade observers doubt that Biden will announce any action on tariffs before his conversation with Xi. WHAT ABOUT THE CHIPS BILL? The White House and Congressional Democrats are scrambling to save their China competition bill and its $52 billion in domestic semiconductor incentives from stalling in election-year politicking. Reminder: Mitch McConnell threw down the gauntlet just before lawmakers returned home for the July 4 break, saying he would tank the bipartisan innovation bill if Democrats keep pursuing a reconciliation budget bill. Now, House and Senate leaders are looking for a workaround. One option is to sacrifice the House's bill, the COMPETES Act . The lower chamber could simply pass the Senate's edition of the competition bill and deprive McConnell of his chance to stall the ongoing negotiations over reconciling the two versions. Leading lawmakers are considering that, Axios reported on Friday, but it's a risky move, as it would ax all of the House Democrats' prized trade provisions, potentially leading some progressives to defect. Another option is the NDAA — the yearly defense bill. Schumer could bring up the legislation during summer, instead of near the end of the year, attach the chips funding and any other broadly supported provisions, and abandon the rest of the cross-chamber negotiations altogether. But that would likely mean cutting many of the trade provisions from both the House and Senate versions — a bitter outcome for lawmakers and staff who have worked on the legislative effort for more than a year. In the hot seat: In the meantime, Senate Majority Leader Chuck Schumer will try to boost the pressure on his chamber to conclude negotiations with the House and pass the broader innovation bill. He has called an all-senators briefing with administration officials on Wednesday as a "reminder of why everyone was behind [the bill] in the first place," in the words of a staffer. TAI PRESSES MEXICO ON ELECTRONIC PAYMENT SERVICES: Tai and Clouthier held talks on a number of bilateral trade irritants, as well as areas of potential cooperation, during the annual USMCA Free Trade Commission meeting last week in Vancouver, Canada. Along with Ng, they issued a joint statement that stressed the need for cooperation to boost North American competitiveness, especially in light of the supply chain challenges created by Russia's war in Ukraine. In that regard, they called for a new USCMA competitiveness subcommittee to cooperate during emergency situations to ensure trade flows smoothly. They also agreed to create a working group to coordinate on critical infrastructure priorities. Read the full joint statement here. Still, you can't have a trade meeting without discussing trade frictions. And on that front, Tai "highlighted the importance of U.S. electronic payment services companies being able to fully participate in Mexico's market," USTR said in its readout of the meeting. The Coalition of Services Industries, whose members include financial services giants Visa and Mastercard, complains that Mexican regulators unfairly favor domestic electronic payment firms Prosa and E-Global, in violation of the market access and national treatment commitments that Mexico made in the USMCA. The Alliance for Trade Enforcement, a broad business coalition that includes CSI and other groups, also mentioned the issue in a statement last week pointing out what it said were a number of deficiencies in Mexico's implementation of the USMCA. USTR's readout indicated Tai also pressed Clouthier on some of the other issues raised by the American business community, including: – Mexican energy policies that continue to threaten U.S. investment and damage Mexico's efforts to address climate change. (Tai repeated at a news conference on Friday that "all options" are on the table to deal with that issue, but declined to say if she would formally ask Mexico for dispute settlement consultations on the issue.) – Mexico's treatment of U.S. investors impacting important manufacturing operations in the southeastern United States. – The importance of sound and transparent regulatory practices, including a science- and risk-based regulatory approval process for agricultural biotechnology products in Mexico. Tai and Clouthier also discussed labor concerns, an area where the Biden administration has been most active in enforcing USMCA, and the ongoing consultations regarding Mexico's enforcement of its fisheries-related environmental laws. TAI GOES TO BAT FOR NETFLIX IN CANADA MEETING: Tai, in her meeting with Ng, raised concern about legislation pending in the Canadian Parliament that would require foreign streaming services like Netflix and Spotify to offer more Canadian content, USTR said. That would add to longstanding U.S. complaints about barriers to Canada's media market. Those include a requirement that Canadian services must account for more than 50 percent of the channels received by cable television and direct-to-home broadcast subscribers. Canada also requires that 35 percent of popular musical selections broadcast on the radio qualify as "Canadian" under a government-determined point system, according to USTR's annual report on foreign trade barriers. The United States also has been pressing Canada to fully implement USMCA commitments to allow for the cross-border supply of U.S. home-shopping programming, an issue that Tai raised again in her meeting with Ng, USTR said. Softwood lumber dispute: Ng told Morning Trade the Biden administration could help curb inflation by lifting the anti-dumping and countervailing duties that the Trump administration imposed on billions of dollars of Canadian softwood lumber. Realistically, that would require the two countries to negotiate a new agreement regulating softwood lumber trade and resolving the litigation that Canada has brought against the United States under the USMCA and at the WTO. "I've been pretty clear that Canada is always ready to be at the table," Ng said. However, U.S. officials have previously accused Canada of refusing to engage on the underlying policies that prompted the U.S. to impose the duties in 2017. "Ensuring that American softwood lumber producers are able to compete on a level playing field against the harmful effects of unfairly subsidized and dumped imports is an important priority for the United States," USTR repeated on Friday. Forced labor: In an interview with The Global and Mail, Tai said she pushed Canada and Mexico to do more to stop imports of Chinese goods made with forced labor. TAI TESTS POSITIVE FOR COVID-19: Tai came back from the meeting in Vancouver with an uninvited companion: Covid-19. She tested positive on Saturday and "is following the Center for Disease Control's guidance to isolate at home," USTR Spokesperson Adam Hodge said. "She is fully vaccinated and boosted. She has not had recent close contact with the President or Vice President." Morning Trade wishes Ambassador Tai a full and speedy recovery and hopes Clouthier, Ng and others present at the meetings are doing OK. A Mexican official said Clouthier had tested negative after returning from the meeting. XI COULD ATTEND APEC MEETING IN NOVEMBER: Chinese President Xi Jinping could attend the annual APEC leaders summit later this year in November, Reuters reported, creating the possibility of a face-to-face meeting with President Joe Biden. There was no direct word from Beijing on Xi's possible APEC attendance. But Chinese Foreign Minister Wang Yi told his Thai counterpart that Xi would attend the APEC summit if he has no other obligations, a Thai foreign ministry spokesman told reporters on Friday. Xi has not left China during the Covid-19 pandemic, making it impossible for the U.S. and Chinese leaders to meet on the fringe of big meetings, such as APEC and the G20, as has often occurred in the past. Last year's APEC summit hosted by New Zealand was virtual, but Indonesia plans an in-person meeting this year.
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