Market Trends 2018/19: U.S. Tariff Policies

Since January 2018, the U.S. administration has imposed a series of tariff policies (U.S. Tariff Policies) that potentially have a wide range of consequences to domestic and international trade and the capital markets. In a period marked by increased globalization and international trade, the uncertainties brought about by aggressive tariff policies are leaving companies and investors wary of the direct and indirect consequences of such measures. As U.S. Tariff Policies continue to evolve, and as uncertainty looms, companies must disclose the effects of these policies on their businesses. This article identifies disclosures related to U.S. Tariff Policies that offer more detailed discussions on the actual and potential effects for the particular registrants and concludes with recommendations on how to enhance disclosures relating to the effects of U.S. Tariff Policies. The company name, its industry, and the type of filing are also provided in each sample disclosure for reference.

In January 2018, the U.S. administration imposed tariffs on solar panels produced outside of the United States, adversely affecting renewable energy companies. Shortly thereafter, the Office of the U.S. Trade Representative (USTR) announced tariffs on foreign washing machines. In March 2018, President Trump signed an order imposing a 25% tariff on steel and a 10% tariff on aluminum imports. As a consequence of the steel and aluminum tariffs, some economists and business leaders have warned of job losses, impacts on industrial competitiveness, and higher costs for businesses and consumers. For example, Coca-Cola and Pepsi have reported U.S. tariffs as a factor leading to increased costs of the product for consumers. President Trump has hiked tariffs on goods and services primarily from China, Canada, Mexico, and the European Union (EU), prompting a wave of retaliation that has the potential to negatively impact American exports of everything from pork and soybeans to Levi's jeans. Some U.S. Tariff Policies have and may continue to incite "tariff wars" between the United States and various countries throughout the world, which may negatively impact shipping and trading products within and outside of the United States.

As of April 2019, the U.S. administration has imposed three rounds of tariffs on Chinese goods, totaling over $250 billion with duties ranging from 10%-25%. The U.S. administration has threatened to levy an additional $267 billion worth of Chinese goods that would cover virtually all Chinese imports. In August 2018, President Trump authorized double tariffs on aluminum and steel against Turkey. By year end 2018, the U.S. administration imposed tariffs that affect approximately 12% of total U.S. imports. The U.S. administration delayed the March 1, 2019 deadline that would raise tariffs from 10%-25% on $200 billion worth of Chinese goods. Most recently, in April 2019, President Trump threatened to tariff all cars made in Mexico and sold in the United States at 25%. Similarly, as of April 2019, President Trump continues to threaten to enact tariffs up to 25% against EU cars and auto parts.

As of April 2019, China imposed retaliatory tariffs on approximately $110 billion in U.S. goods targeting important industries such as agriculture. In June 2018, the European Commission imposed tariffs on approximately $3.5 billion worth of U.S. goods and reported in January 2019, that they are prepared to tariff over $23 billion worth of U.S. goods should the U.S. follow through with its threatened tariffs against EU cars and auto parts. In July 2018, Mexico and Canada imposed over $3 billion and $13 billion, respectively, in levies on U.S. exports. As of April 2019, Mexico and Canada threaten not to ratify the United States-Mexico-Canada Agreement (USMCA) until Mexican and Canadian steel and aluminum tariffs are lifted...

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