Mr. Trump quietly restarted the tax imposition machine

US President Donald Trump once announced that he would re-establish import tariffs, after this policy was repeatedly rejected by the Court and faced many legal challenges. He is realizing that commitment, but no longer loudly and through midnight social media posts like before.

Mr. Trump’s new approach to import taxes is considered more cautious, methodical and patient. The policy rebuilding tools this time are more targeted and technical, making them sustainable over the long term.

On June 2, the Office of the US Trade Representative (USTR) Jamieson Greer announced the results of a months-long investigation into its partners’ policies in preventing the circulation of products made with forced labor. The investigation was conducted under Article 301 of the Trade Act of 1974. USTR believes that this disadvantages the US in competition.

This agency proposes to impose an additional tax of 10% on goods from Canada, Ecuador, EU, Indonesia, Mexico, Pakistan, Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia, Taiwan and the UK. For the remaining 45 economies under investigation, including Vietnam, the additional tax rate is 12.5%.

These tariffs do not take effect immediately. USTR will have to collect public comments, which will last until July 6. After one day, the Office of the US Trade Representative will hold hearings on this proposal.

Regarding the proposed additional tax rate with Vietnam, responding at a regular press conference on the afternoon of June 4, Ministry of Foreign Affairs spokesperson Pham Thu Hang said the USTR’s investigation conclusion “does not accurately reflect the reality and efforts of Vietnam in preventing and minimizing forced labor”.

The spokesperson of the Ministry of Foreign Affairs affirmed Vietnam’s consistent policy of prohibiting all forms of forced labor, complying with regulations of the International Labor Organization (ILO), free trade agreements and ensuring implementation in practice.

Ms. Hang said that Vietnam has exchanged and provided complete information during the investigation process and will continue to work with the US side in a constructive and cooperative spirit to resolve remaining disagreements, based on bilateral and multilateral cooperation. This is in an effort to protect the legitimate interests of Vietnamese workers and businesses.

This investigation was announced by USTR on March 11. At that time, the agency also said it would open another investigation into industrial overcapacity at 16 partners, still based on Article 301 on unfair practices.

These moves are intended to restore import tax pressure after the US Supreme Court in February rejected the taxes President Donald Trump imposed based on the International Emergency Economic Powers Act (IEEPA). After the Supreme Court’s ruling, Mr. Trump signed an executive order imposing an additional import tax of 10% for 150 days, invoking authority under Article 122 of the Trade Act of 1974.

However, this 10% tax is only temporary. The Trump administration has signaled it may use Article 301 for longer-term purposes. Article 301 allows USTR to investigate countries that potentially violate trade agreements or engage in conduct that harms American businesses. During his first term, Mr. Trump used this provision to increase tariffs on some imports from China, as well as aircraft and other European Union goods.

Besides, unlike Article 122, taxes arising from investigations under Article 301 are not limited in terms of tax rate or application period. In March, Greer said he hoped to complete the investigations before the 10% tariff expired in July.

However, last month, the US Court of International Trade (CIT) also ruled against the US’s 10% import tax. They only blocked the tax from being applied to Washington state and two small businesses – the group that filed this tax lawsuit since early March.

On June 1, USTR proposed imposing a 25% tax on many items from Brazil, following an investigation under Section 301. The agency accused Brazil of engaging in “unreasonable” trade practices and “burdening or restricting US trade”. Early last month, the US President also announced that he would raise import tariffs on cars from the EU to 25%, because the bloc did not comply with the trade agreement.

Above APRyan Majerus – trade lawyer at King & Spalding predicts that new tariffs will be applied before the current temporary taxes expire. “USTR is under great pressure to ensure there is not any gap in revenue from import taxes. I believe that with the current progress, they will complete everything and be ready to impose new taxes on time,” he said.

In addition to proposing new taxes, the Trump administration also filed an appeal of a federal judge’s ruling, requiring the government to refund all $166 billion in taxes collected, according to policies citing IEEPA.

The government began refunding these fees in April, but said it would not immediately pay tens of billions of dollars in taxes, including complex payments where importers have not yet sued the government. It is unclear when the system will open for all payments eligible for refund.

In addition, the government also appealed the ruling requiring US Customs and Border Protection Commissioner Rodney Scott to testify on the government’s return process. In its appeal, the administration recommended other officials who it said had a deeper understanding of the tax refund process.