Lobbying against import tariffs: “The most beautiful word”
“To me ‘tariff’ is the most beautiful word in the dictionary,” said presidential candidate Donald Trump on October 15 during a conversation with Bloomberg’s editor-in-chief, attended by around 600 representatives from American businesses. With the inauguration of the Trump administration approaching in January, the introduction of import tariffs is imminent. The specifics—how, which, and when—are still unclear. What is clear is that these tariffs will affect internationally operating companies. This presents work for lobbyists: learn from Trump’s first term, understand how tariffs may be introduced, and foster internal and external multidisciplinary collaboration.
Guarantees from lessons of the Past?
During President Trump’s first term, the Netherlands, as an EU member state, faced various tariff barriers. These measures were largely targeted at the EU as a whole and impacted several companies and sectors. Key tariffs that affected the Netherlands included:
- March 2018: A 25% tariff on steel imports and a 10% tariff on aluminum imports from several countries.
- European goods tariffs: A 25% tariff on items like cheese, wine, and spirits. Dutch cheese and other agricultural products were among the targets, directly impacting Dutch exports.
- Threats over Digital Services Tax (DST): Although no direct tariffs were imposed, the Trump administration threatened tariffs against countries implementing DSTs.
The Dutch government responded unilaterally and through EU negotiations to mitigate trade tensions and consequences for specific businesses. The Netherlands’ American embassy in Washington and the U.S. embassy in the Netherlands played crucial roles in these efforts.
Process and responsibilities
In the U.S., the authority to regulate trade and impose tariffs is shared between Congress and the president.
The role of Congress
The U.S. Constitution grants Congress primary authority over trade policy through legislation, such as the Trade Act of 1974, which allows the president to take specific trade actions under certain conditions. Other key legislation includes the Tariff Act of 1930 (“Smoot-Hawley Tariff”) and the Trade Promotion Authority (TPA), which sets guidelines for negotiating and approving trade agreements.
The role of the President
Congress has delegated certain powers to the president to act unilaterally in specific trade matters. For instance:
- Section 232 of the Trade Expansion Act of 1962 allows the president to impose tariffs if imports threaten national security.
- Section 301 of the Trade Act of 1974 permits action against unfair foreign trade practices.
The president often uses these delegated powers to introduce or adjust tariffs without prior Congressional approval. This approach is expected to continue during a potential second Trump term.
Required approvals
Under delegated powers, the president does not need Congress’s immediate approval to impose tariffs. However, Congress oversees these decisions and can pass legislation to overturn or amend the president’s tariff decisions. Such legislation requires the president’s signature or enough votes to override a veto. With a Republican-majority Congress in place for the next 22 months, the likelihood of reversals is minimal.
Preparing for action
While it remains unclear which tariffs will be introduced and when, it is certain that the first tariffs will follow soon after the inauguration on January 20, 2025. Negotiations will determine their final form and implementation. Companies can prepare now by developing scenarios based on:
- Assessing economic footprints of operations in, to, and from the U.S.
- Leveraging regular contact with relevant ministries in The Hague, the European Commission in Brussels, or trade associations. Additionally, maintain close ties with the Dutch diplomatic mission in Washington and local U.S. state governments where operations are conducted. The U.S. embassy in the Netherlands is also a valuable source of information.
- Mobilizing networks and expertise in legal, economic, fiscal, and public affairs on both sides of the Atlantic.
In summary, companies should base their business strategies on these proactive actions, ensuring that when import tariffs are announced, scenarios for response are ready.
"Werk aan de winkel voor de lobbyist en leer uit de eerste Trump-regeerperiode, begrijp de manier op welke wijze tarieven kunnen worden geïntroduceerd en werk intern en extern multidisciplinair samen."
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