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USITC Releases Report Concerning the Economic Effects of Temporary Duty Suspensions and Reductions Enacted in Last Year’s Miscellaneous Tariff Bill

October 18, 2019
News Release 19-105
Inv. No. 332-565
Contact: Peg O'Laughlin, 202-205-1819
USITC Releases Report Concerning the Economic Effects of Temporary Duty Suspensions and Reductions Enacted in Last Year’s Miscellaneous Tariff Bill

The U.S. International Trade Commission (USITC) today released a report on the effects on the U.S. economy of duty suspensions and reductions enacted under the American Manufacturing Competitiveness Act (AMCA).

The report, American Manufacturing Competiveness Act: Effects of Temporary Duty Suspensions and Reductions on the U.S. Economy, was triggered by the September 13, 2018, enactment of the Miscellaneous Tariff Bill Act of 2018 (MTB Act of 2018).

As required by the AMCA, the USITC, an independent, nonpartisan, factfinding federal agency, prepared a report concerning the effects on the U.S. economy of duty suspensions and reductions enacted pursuant to AMCA.

The USITC’s report provides a broad assessment of the economic effects of duty suspensions and reductions on U.S. producers, purchasers, and consumers, as well as case studies looking at the effects on groups of products covered by the MTB Act of 2018. The report also includes recommendations from interested parties with respect to those domestic industry sectors that might benefit from permanent duty suspensions or reductions, with a particular focus on inequities created by tariff inversions. Much of the information in this report comes from a survey conducted by the Commission after the duty suspensions and reductions became effective.

Main Findings:

  • As of March 2019, over 90 percent of firms responding to the Commission’s questionnaire imported or planned to import goods under the Harmonized Tariff Schedule 9902 headings (provisions) that provide temporary duty suspensions and reductions; about one-third of these firms have increased or planned to increase imports. Between November 2018 and May 2019, importers saved $179 million in duties on imports of $5.4 billion.
  • As of March 2019, many responding firms stated they had not had enough time to take full advantage of the duty suspensions and reductions. Some respondents also reported that section 301 tariffs on products of China have lessened the positive impacts of the duty relief.
  • As a result of the duty relief, nearly a quarter of responding manufacturers reported a decrease in production costs. Among all respondents, many expected future increases in sales volumes, number of customers, and investment in new product development. Compared with larger firms, more responding small and medium-sized enterprises (SMEs) reported that the duty relief has had positive effects on virtually all business operations.
  • Chemicals firms account for the largest share of 9902 headings and imports. Thus, the largest number of responding firms reporting benefits from the duty relief are in the Chemicals group.
  • The results of the Commission’s economic modeling suggest that the temporary duty relief will lead to a small increase in output, welfare, and gross domestic product (GDP) in the United States. Moreover, the average price of goods imported under the 9902 provisions will likely decline, although not by the full amount of the duty reduction.

American Manufacturing Competiveness Act: Effects of Temporary Duty Suspensions and Reductions on the U.S. Economy (Investigation No. 332-565, USITC Publication 4987, October 2019) is available on the USITC website at: https://www.usitc.gov/publications/332/pub4987.pdf.

USITC general factfinding investigations cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding investigation reports are subsequently released to the public, unless they are classified by the requester for national security reasons.

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