Reports from Washington regarding another round of stimulus have American riding a rollercoaster in recent weeks. Just a few weeks ago, it seemed stimulus talks had been stalled, only to be potentially reinvigorated the next day, and again stalled last week only to be reinvigorated by the end of the week.
House Speaker Pelosi and Treasury Secretary Mnuchin have been meeting regularly, with reports late last week noting the parties were working quickly toward an agreement. Central discussion has been funding for testing and tracing needed to safely reopen schools and the economy. According to Bloomberg, three remaining sticking points include aid for state and local government, school funding, and liability shields for employers. However, by Monday morning, optimism again waned as Speaker Pelosi and Secretary Mnuchin continue to reconcile differences.
While just a few weeks ago President Trump announced moving another stimulus package to the backburner, instead forging ahead with the nomination of a new justice to the Supreme Court, the President has since reversed course and pushed for Congress to reach a deal on a stimulus package. On Fox News last week the President noted he wanted a bill “even bigger than the Democrats” though he went on to note that not all Republicans were in agreement with him.
Importantly, according to the Washington Post, Federal Reserve Chair Jerome H. Powell warned "more economic stimulus was needed to sustain the recovery. Politico further reported the Chairman Powell said, "too little fiscal support for the economy would lead to a weak recovery, creating unnecessary hardship for households and businesses." Bloomberg reported that Federal Reserve Bank President Neel Kashkari said the economic recovery had "flattened out and was in "vital need" of economic stimulus.
Meanwhile, the stock market seems to be riding the same ups and downs as optimism for another round of stimulus before the election. On Monday morning, CNN reported stocked tumbled alongside hopes for a new stimulus package before the election.
On July 30, 2020 the Coalition of American Chassis Manufacturers filed antidumping (AD) and countervailing duty (CVD) petitions on certain chassis and subassemblies thereof from China. The Coalition includes Cheetah Chassis Corporation, Hercules Enterprises, LLC, Pitts Enterprises, Inc., Pratt Industries, Inc., and Stoughton Trailers, LLC. The alleged dumping margin in the filing was 211.49%
The chassis and subassemblies thereof are further defined to include finished and unfinished, assembled or unassembled, coated or uncoated regardless of the number of axles. The subassemblies description includes reference to;
NATM convened its Special Projects Subcommittee to evaluate the case, its scope, and potential impact to the industry. The Association also reached out to contacts in peer groups as well as some petitioners for additional insights.
Importantly, this language would include materials brought in to be further assembled as well as fully assembled products. In discussions with certain members of the coalition, it was clear the intention was to include potential workarounds to the chassis and subassemblies, thus identifying unassembled products as well. Essentially, this includes kits that could be sold as components needing further assembly upon receipt.
On September 11, the International Trade Commission (ITC) made an affirmative preliminary injury determination. Investigations will now be undertaken for the Department of Commerce (DOC) to gather information from respondents and the Chinese government. DOC is to make its preliminary decision by October 23, 2020 of the CVD case and January 6, 2021 on the AD case.
For a complete outline of the case schedule, click here.
NATM member companies may receive requests for information and should respond accordingly. NATM will continue to monitor the situation and the impact on its members, though at this time any direct participation by the Association in the case has not yet been deemed appropriate.
Phase One Trade Deal
On Wednesday, Jan. 15 negotiators for the US and China came together to sign the Phase One trade agreement. The deal, seven chapters in length, covers intellectual property, technology transfer, agriculture, financial services, currency, expanding trade, and dispute resolution. The full text of the agreement can be found here and fact sheets found here.
Though the agreement did not include tariff relief, the President did reaffirm the commitment to cutting the List 4A tariff rate to 7.5% from 15% on Feb. 14. As a reminder, List 4A is primarily clothing. According to Bloomberg, unnamed officials have indicated that no additional tariff relief is to be expected until after the 2020 election.
Notably, China has posted its weakest economic growth in 29 years according to Reuters.
US-Mexico-Canada Agreement (USMCA)
While many believed USMCA passage might not occur in the Senate until after the impeachment trial by the Senate, on Jan. 16 the Senate passed USMCA 89-10. Next, the bill headed to the President’s desk where he is expected to sign by the end of January.
However, the President’s signature does not yet mean the agreement is in force. Mexico and Canada must take the necessary measures to comply with the agreement. A slight delay can be expected as the Canadian parliament doesn’t resume until Jan. 27. When both countries have taken the appropriate steps, the President must notify Congress in writing 30 days prior to entry into force of the agreement of such action. Still the agreement enters into force after the President and government of Mexico and Canada follow-through with all specified implementing procedures. This is expected in 2020, though the exact timeline remains uncertain.
Last week, the Trump Administration met with China at the White House to continue negotiations on a trade deal. The meeting, spanning two days, has laid the groundwork for a Phase One deal. While specifics are still murky, optimism for next steps helped to de-escalate the rising tariffs, delaying the October 15th scheduled increase. At the same time, USTR announced that exclusions requests for List 4A could be filed beginning October 31.
President Trump met with Chine Vice Premier Liu late the week of October 13th at the White House. While speculations varied widely about the possible results, reports from both the Administration and most recently the Vice Premier indicate the groundwork for a Phase One deal is well underway. While the text of the deal is still being nailed down, according to Treasure Secretary Mnuchin the deal will include intellectual property, currency, and agriculture. While House economic advisory Larry Kudlow expanded on the agriculture component noting that China’s commitment to the purchase of $40-50 billion of agricultural products “would depend in part on private companies and market conditions.” Bloomberg reported that Chinese Vice Premier Liu confirmed a Phase One deal, commenting “China and the U.S. have made substantial progress in many aspects, and laid an important foundation for a phase one agreement,” though he did not confirm any specifics of the deal. Trump is optimistic that that the trade deal will be signed by mid-November. While the deal is not yet complete and is only a part of a larger, more comprehensive agreement, the talks did prevent the escalation of the Section 301 List 1-3 tariffs planned for October 15th.
Meanwhile, the United States Trade Representative (USTR) announced on Friday October 18th that the Office would begin accepting tariff exclusion requests for important subject to 15% tariff on List 4A products that went into effect on September 1, 2019. Exclusion requests can be submitted beginning October 31, 2019 via the new exclusion portal.
On August 22, 2019 the Federal Motor Carrier Safety Administration (FMCSA) published a notice of proposed rulemaking (NPRM) seeking comments on proposed changes to the Hours of Service regulations. The proposed changes are intended to provide flexibility in several areas following concerns raised by industries and commercial drivers. These include:
The entire notice can be found here including additional discussion about comments received and Agency reasonings.
Originally, the NPRM noted a due date for comments of October 7th, however, that deadline has been extended to October 21. FMCSA is seeking comments from the industries and drivers impacted by these potential changes. More information on the topic can be found here and comments may be submitted to FMCSA here.
As NATM previously reported, on May 10 Section 301 List 3 tariffs escalated from 10% to 25%. On May 21st the US Trade Representative announced in a Federal Register notice that the exclusion process for List 3 was to be implemented on or around June 30, 2019. The notice includes the form to be used for making an exclusion request. It is important to note that for List 1 and List 2, requests received early in the process have been decided on more quickly.
As a result of the List 3 escalation, on Monday, May 13 China announced retaliatory tariffs ranging from 5% to 25% on $60 billion of U.S. exports to take effect beginning June 1. The announcement from China noted that the increase of List 3 tariffs was an “an escalation of Sino-US economic and trade frictions, contrary to the consensus between China and the United States on resolving trade differences through consultations, jeopardizing the interests of both sides and not meeting the general expectations of the international community.”
As anticipated, the United States Trade Representative released a List 4 late in the day on May 13. List 4 includes a vast array of $300 billion worth of goods, from books to housewares, shoes, and sporting goods and much more. The proposed tariff rate is 25%. Along with the release of List 4 comes a timeline for hearings and comments from the public. Although no firm date has yet been set, implementation of List 4 is currently not expected before late June.
NATM will keep members apprised as the List 3 exclusion process is released and as List 4 moves forward.
With the Trump Administration announced rolling back Section 232 aluminum and steel tariffs on Canada and Mexico, and media sources are reporting that no quotas will be placed on either country. However, it is likely there will be additional requirements regarding transshipment of steel and aluminum products that will remain subject to the action. There is additional opportunity for re-imposition of these tariffs should imports begin to surge. As of this writing, there have been no indications of retroactive relief. As more details become available, NATM will notify its members.
On March 25th the U.S. Court of International Trade released its opinion rejecting the challenge of the American Institute for International Steel Inc. (AIIS) vs. United States that alleged the enforcement of the President’s tariffs on certain steel imports under Section 232 was an improper delegation of legislative authority in violation of the Constitution. The US Court of International Trade found it was bound by precedent and as such, found in favor of the United States in the delegation of such authority.
AIIS not only immediately filed a notice of appeal with the Court of Appeal for the Federal Circuit, but also filed papers requesting that the U.S. Supreme Court allow them to bypass the Appeals Court. AIIS notes in their request it would be a waste of resources to go through the year-long process knowing the Appeals Court is bound by the same precedent. They also argued that the matter is urgent as the President is considering launching another round of Section 232 tariffs on imported automobiles.
It is rare for the Supreme Court to honor such a request and it will take four out of nine Justices to agree to hear the case for it to proceed.
On March 7th, the Department of Labor (DOL) announced a proposal to the salary-level threshold for the overtime pay regulation. On March 21st the DOL published the notice in the federal register, opening a 60 day public comment period which will close on May 21st.
In May 2016, the DOL released the Final Rule on the overtime pay regulation raising the threshold from $23,660 to $47,476 for full-time exempt employees, but that effort was blocked by a U.S. District Court Judge and the appeal was denied. Since that time, employers have been expecting a new proposal to be released.
The new proposal raises the salary-level threshold to $35,308 ($679 per week), meaning individuals who make under $35,308 must be paid overtime if they work more than 40 hours per week. The proposal does not call for automatic adjustments to the salary or create salary levels based on the region of the country.
NATM's HR consultants released the following information in regard to this potential change:
What does this mean for employers? To prepare for the implementation of a potential Final Rule, employers should begin reviewing and analyzing the positions held by exempt employees who are paid less than $679 per week.
First, the employer should review each exempt employee’s job description. In order for an exemption to apply, an employee’s specific job duties and earnings must meet all applicable FLSA requirements. Job titles never determine exempt status under the FLSA.
Second, a salary analysis should be completed to determine how many hours on average an employee works in a year or within a pay period. As a business owner or senior level manager, you should make this analysis: Is it more cost effective to pay the overtime amount of 1½ times the employee’s regular rate of pay for any time worked over forty (40) hours or to increase the employee’s wage to meet the new salary threshold of $35,308?
Finally, once the position description review and salary analysis have been completed, an employer has several options to remedy the situation and ensure compliance with the proposed regulation changes.
Wait or act now? While a Final Rule has not been released, it may be in the best interest of employers to start reviewing options to ensure compliance with the proposed regulation changes. The proposed regulation changes are subject to a public comment period, which allows time for the public to express its views and concerns regarding the actions of an administrative agency. These new proposed regulations are anticipated to take effect in the latter part of 2019.
More information about the proposed rule is available here. NATM will keep its members apprised of development as the proposal is currently in a 60 day public comment period (which began March 7th). Should you have any questions, please reach out to NATM Executive Director, Kendra Ansley at Kendra.Ansley@natm.com or at 785-272-4433.
After a slow start and the complications of a several week partial government shutdown, the 116th Congress has taken shape. Committee assignments have been established and the new Congress includes 30 incoming members to the key committees of jurisdiction over transportation and infrastructure issues. If your Representative or Senator is featured on these lists and you are interested in inviting them to tour your facility, please contact Meghan Ryan at NATM headquarters.
A wave of retirements, electoral defeats, and a shifting majority brings 16 new Democratic members to the House Committee on Transportation & Infrastructure (T&I), as well as eight new members on the Republican side of the aisle. Below are the newest faces to the House T&I committee rosters.
The Senate Committee on Commerce, Science & Transportation welcomes both a new Chair and Ranking Member, with Senator Roger Wicker (R-MS) taking the gavel from newly elevated Majority Whip John Thune, and Senator Maria Cantwell replacing the recently defeated Senator Bill Nelson. In addition, the committee welcomes three new members:
Darrell Conner is a Government Affairs Counselor, Dennis Potter is a Government Affairs Advisor, and Brody Garland is a Government Affairs Specialist at the law and lobbying firm of K&L Gates, where they represent NATM and other clients on legislative, regulatory, policy and political matters. Conner can be reached at Darrell.Conner@klgates.com, Potter can be reached at Dennis.Potter@klgates.com, and Garland can be reached at Brody.Garland@klgates.com.