On Friday President Donald Trump declared a national emergency under the Stafford Act to address the coronavirus pandemic. The Stafford Act is the same 1988 law presidents use to declare disaster areas after storms and other natural disasters. The national emergency declaration frees up billions of dollars in Federal Emergency Management Agency funds to confront the coronavirus.
That same day, the Office of the United States Trade Representative (USTR) announced a new group of product-specific exclusions to the 25 percent tariff imposed by the United States since September 24, 2018 on $200 billion in goods imported from China. The newly granted exclusions apply to certain medical products and supplies, such as disposable gowns and drapes, that are needed to fight the corona virus. The tariff exclusions will be effective retroactively from September 24, 2018 until August 7, 2020. The Federal Register notice announcing the exclusions can be found here: https://www.govinfo.gov/content/pkg/FR-2020-03-16/pdf/2020-05310.pdf. U.S. Customs and Border Protection will issue instructions on entry guidance and implementation.
The tariffs imposed by the Trump administration and increased concern about heavy reliance on a single market for critical medical and pharmaceutical products have forced many businesses to rethink their China-based supply chains. The Administration is reportedly preparing an executive order that would close loopholes allowing the government to purchase pharmaceuticals, face masks, ventilators and other medical products from foreign countries and is also pushing for streamlined regulatory approvals for American-made products. Last week Senators Marsha Blackburn (R-TN) and Bob Menendez (D-NJ) introduced legislation to incentivize production of active pharmaceutical ingredients (API) in the United States.
For more on how COVID-19 is affecting the U.S.-China trade relationship, see our recent update here: https://www.mayerbrown.com/en/perspectives-events/publications/2020/03/the-impact-of-covid-19-on-the-us-china-trade-relationship