Policy and Legal

To thrive, create jobs and produce the essential goods the U.S. and our trading partners use every day, the manufacturing sector needs a fair, transparent Section 301 tariff exclusion process, the NAM said Tuesday.

• However, the tariff increases announced this week by the Biden administration could make it much more difficult for manufacturers to produce those critical items.

What’s going on: As part of the U.S. Trade Representative Office’s final Section 301 tariffs review—which the NAM had long urged the office to complete—President Biden said his administration plans to raise “tariffs on Chinese electric vehicles to roughly 100% … increas[e] a key tariff rate on steel and aluminum products to 25% from 7.5%,” raise the solar-cell tariff to 50% from 25% and create a new 25% duty on shipping cranes, according to Reuters (subscription).

• Section 301 of the Trade Act of 1974 authorizes the U.S. to act against foreign trade practices it believes violate agreements. The NAM has been pushing for a finalized report with a fair, transparent Section 301 tariff exclusion process that will both reduce the burden on manufacturers and keep pressure on China to adhere to fair practices.
• The process would allow manufacturers to ask for tariff exclusions for specific products they need.
• “The NAM has long advocated for a full global strategy and a rules-based trading system that benefit manufacturers and workers by opening new markets with our allies,” NAM President and CEO Jay Timmons said.

Why it’s important: Far from freeing the U.S. of “unacceptable risks” stemming from unfair Chinese trade practices, in the absence of a new exclusion process, these tariff increases could limit the ability of manufacturers in the U.S. to obtain needed supplies for goods production.

• This, in turn, could jeopardize U.S. jobs and competitiveness.
• “Manufacturers are concerned about the potential impact this broad swath of tariffs could have on our ability to produce the essential products needed to drive our economy forward, especially if critical inputs become less available and more costly,” said Timmons.

The background: The USTR is legally required to review Section 301 tariffs four years after they are initiated. This most recent review—started in May 2022—is overdue.

• The exclusion process the NAM has long requested allows manufacturers to ask for tariff exclusions for specific products they need.

What should be done: “Manufacturers urge the administration to negotiate new trade agreements with allies and partners around the world and create a new, comprehensive and transparent 301 exclusion process to ensure that manufacturing in America is not being disadvantaged by our own government,” Timmons concluded.

Manufacturers and other businesses on both sides of the U.S.–Mexico border are feeling the pinch from sudden, intermittent port closures and other government measures being taken to mitigate the ongoing migrant crisis, the NAM and two allied groups told President Biden and Mexican President Andrés Manuel López Obrador this week.

What’s going on: Last December, U.S. Customs and Border Protection temporarily shuttered critical rail ports, including San Diego, California, and El Paso and Eagle Pass, Texas, in an effort to stem migration surges, idling nearly 10,000 rail cars on both sides of the border.

• Last month, the Texas Department of Public Safety renewed safety inspections of vehicles between Texas and Mexico, adding hours to cargo trucks’ border wait times (Freight Waves).

Why it’s important: Port closures and increased vehicle inspections “have significantly increased congestion around ports of entry, caused delays to cross-border trade and harmed productive businesses across industries and their employees,” said NAM President and CEO Jay Timmons, Texas Association of Business President and CEO Glenn Hamer and CONCAMIN President Alejandro Malagón.

• The stoppages “risk making critical supply chains between the United States and Mexico less resilient and dependable.”

What should be done: The U.S. and Mexican governments must commit to creating and abiding by predictable, transparent processes for cross-border trade, the groups urged.

• In addition to stopping the port closures for commercial freight and trucking, “our two countries should strive to enhance trading ties as the importance of nearshoring and friendshoring accelerates. Doing so will make our manufacturing, energy and agricultural sectors more competitive globally.”

Washington, D.C. – Following the introduction of the Miscellaneous Tariff Bill Reform Act, National Association of Manufacturers Managing Vice President of Policy Chris Netram released the following statement:

“For more than three years, manufacturers—particularly small and medium-sized manufacturers—have been paying millions of dollars in higher prices for critical inputs due to the expiration of the Miscellaneous Tariff Bill. This legislation is a significant step forward for manufacturers, which are losing more than $1.3 million every day on products not available in the U.S.—more than $1.5 billion overall.

“Restoring the MTB would strengthen manufacturing here at home, giving our sector the ability to source raw materials and components that can’t be produced domestically at scale or at competitive prices.

“Historically, the MTB has always had bipartisan support, and we thank House Ways and Means Trade Subcommittee Chairman Adrian Smith for his leadership and efforts to introduce MTB legislation. We urge the House to act quickly so that we can get one step closer to getting this critical legislation to President Biden’s desk.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.89 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Washington, D.C. – Following the Biden administration’s announcement of new 301 tariffs targeting Chinese products in sectors including electric vehicles, solar equipment, semiconductors, batteries, medical equipment and critical minerals, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“Manufacturers are concerned about the potential impact this broad swath of tariffs could have on our ability to produce the essential products needed to drive our economy forward, especially if critical inputs become less available and more costly.

“The NAM has long advocated for a full global strategy and a rules-based trading system that benefit manufacturers and workers by opening new markets with our allies. But when countries play by their own rules and create distortions, the U.S. should consider the use of all legislative and enforcement tools.

“The expansion of manufacturers’ global reach through a more open and more fair global trading environment has been pivotal to expanding U.S. industrial production to record levels, enabling businesses of all sizes to raise wages and create more high-skilled U.S. jobs. That is why manufacturers urge the administration to negotiate new trade agreements with allies and partners around the world and create a new, comprehensive and transparent 301 exclusion process to ensure that manufacturing in America is not being disadvantaged by our own government.

“Politicians and policymakers on both sides of the aisle need to understand that we can’t instantly reshape supply chains that took decades to build—especially the supply chains that bring us vital inputs and components essential to our everyday lives.

“Additionally, to fully unleash the power of manufacturing in the United States, policymakers must also ensure that America maintains a competitive tax and regulatory regime that allows manufacturers to ramp up domestic investment; streamline the permitting process so that new facilities and energy and infrastructure projects will not be held up by red tape; grow the manufacturing workforce; and protect innovation. Together, these policies will help manufacturers create jobs, grow wages and expand exports to the 95% of customers who reside outside of our border.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.89 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

The House Ways and Means Committee unanimously passed legislation Wednesday that includes much-needed reforms to pharmacy benefit managers, underregulated middlemen that raise health care costs for manufacturers and manufacturing workers (Fierce Healthcare).

What’s going on: PBM reforms contained in the Preserving Telehealth, Hospital and Ambulance Access Act include increasing transparency into PBMs’ business practices and delinking PBM compensation from medicines’ list prices. These changes will help reduce prices for seniors who rely on Medicare prescription drug plans.

• The NAM has been instrumental in advancing these reforms.

Why it’s important: “When Americans face soaring prices for medicines or treatments, there’s a good chance that is because a PBM has driven up the price,” NAM President and CEO Jay Timmons said Wednesday.

• “These middlemen operate with minimal transparency, and their practices distort the market, increasing the list prices patients pay for medicines while making it more difficult for manufacturers to offer quality, affordable health care benefits.”

What’s next: The legislation approved Wednesday applies to the Medicare market. The NAM is calling on Congress to enact similar changes in the commercial insurance market to lower health care costs for manufacturing employees who participate in employer-sponsored plans.

Washington, D.C. – Following the House Ways and Means Committee’s unanimous approval of legislation to reform pharmacy benefit managers—middlemen who unfairly increase the prices that patients pay at the pharmacy counter by controlling negotiations between insurers and biopharmaceutical manufacturers—in Medicare markets, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“The NAM commends the Ways and Means Committee for unanimously taking a powerful step toward reforming the PBM system and lowering the cost of health care for all Americans.

“When Americans face soaring prices for medicines or treatments, there’s a good chance that is because a PBM has driven up the price. These middlemen operate with minimal transparency, and their practices distort the market, increasing the list prices patients pay for medicines while making it more difficult for manufacturers to offer quality, affordable health care benefits.

“By increasing transparency into PBMs’ business models and delinking their compensation from a medicine’s list price, these critical PBM provisions will significantly reduce costs for seniors who rely on Medicare for health care coverage. Congress should advance these important reforms.

“In addition, manufacturers encourage Congress to enact similar reforms in the commercial insurance market to bring down health care costs for manufacturing workers participating in employer-sponsored plans.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.89 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Artificial intelligence is improving efficiency, workplace safety, product development, machine maintenance and supply chain logistics at manufacturing facilities everywhere, according to a new, first-of-its-kind report from the NAM.

What’s going on: “Working Smarter: How Manufacturers Are Using Artificial Intelligence,” released today, details use cases for AI in the sector, discussing how manufacturers nationwide are using it to improve lives everywhere.

• The report features deep dives on AI-powered technologies at manufacturers, including Johnson & Johnson, Schneider Electric and Hitachi.

Trailblazers need good policy, too: “From developing more effective clinical trials and improving workplace safety to strengthening supply chain resiliency and supporting workforce training for employees, AI is unlocking new opportunities to strengthen our modern manufacturing workforce and improve the lives of all Americans,” said NAM President and CEO Jay Timmons. “Congress and the Biden administration can support manufacturers’ adoption of AI by enacting strong data privacy protections, investing in workforce training and providing regulatory certainty.”

• Legislators should “lean on” manufacturers’ deep experience when drafting AI-related legislation, added Johnson & Johnson Executive Vice President and Chief Technical Operations & Risk Officer and NAM Board Chair Kathy Wengel.
• “All possible futures for modern manufacturing in the U.S. involve AI,” she said. “Policymakers must develop sensible, carefully thought-out frameworks for various AI applications. … We need a policy environment that supports innovation and growth in manufacturing AI, because it will bolster U.S. competitiveness and leadership in this critical emerging field.”

The recommendations: The report contains immediately implementable policy recommendations for lawmakers:

• Invest in research and development and career technical education institutions to train the modern manufacturing workforce.
• Pass federal privacy legislation to advance individuals’ privacy protections and give legal clarity that will support continued innovation by manufacturers.
• Use a risk-based approach to new AI regulations that tailors any future laws to specific use cases and minimizes the burden of compliance.
• Ensure that AI regulation is aligned globally.

In a bipartisan vote Wednesday, the Senate moved to advance Federal Aviation Administration reauthorization—but lawmakers still face a looming deadline to pass the legislation (The Hill).

What’s going on: “Senators voted 89 to 10 to overcome the first procedural hurdle and move toward consideration of the package ahead of the May 10 deadline.”

• The draft 1,069-page bill—which already has been punted three times—sets the agency’s priorities. It would authorize billions of dollars in appropriations for the FAA, as well as hundreds of millions of dollars for the National Transportation Safety Board, from fiscal year 2024 through 2028.
• But all 100 senators must agree to fast-track the measure for it to pass before next Friday.

Why it’s important: The FAA reauthorization bill renews statutes governing the agency’s civil aviation programs, as well as revenue collection authority. From air traffic operations to airport development, these functions are critical to the U.S. economy and the ability of Americans to travel.

However . . . Both Democrats and Republicans want amendment votes on the measure, and “lawmakers acknowledge it could be a bumpy ride” to passage.

A hot-button issue: One sticky wicket amendment that’s likely to get a vote would remove language in the bill that adds 10 flights at Ronald Reagan Washington National Airport.

• Senators from the Washington, D.C., area say the airport cannot handle any more traffic. Virginia and Maryland are home to Dulles International Airport and Baltimore Washington International Airport, respectively.

The EPA’s overly stringent final rule on particulate matter puts continued U.S. innovation and economic growth in jeopardy, the NAM and allied groups told congressional leaders Monday.

What’s going on: In February, the EPA lowered the standard for particulate matter, or PM2.5, in its National Ambient Air Quality Standards rule by 25%, down from 12 micrograms per cubic meter of air to nine.

• This week, the NAM, along with 58 allied organizations, urged key House and Senate members to act soon to “stop this harmful rule before it takes effect.”

​​​​​​​Why it’s important: The probable negative effects of allowing the change include “making it more difficult to create jobs, build cutting-edge factories and lead the world in the development of products that will shape modern life in the decades ahead,” the groups said.

• Compliance costs could exceed $1.8 billion, according to the agency’s own estimates.
• The lowered limit also puts the U.S. at a great disadvantage to global competitors, which “have adopted standards that are less stringent than the EPA rule and are phased in over a much longer time frame.”

What needs to happen: Congress should pass a resolution of disapproval regarding the new standard immediately.

Following a steady drumbeat of advocacy by the NAM, the House Committee on Ways and Means has formed tax working groups dedicated to finding legislative solutions to the scheduled expiration of pro-growth tax policies at the end of 2025.

What’s going on: Each of the 10 working groups will focus on an area of the economy that will be affected by the sunsetting of certain measures in the Tax Cuts and Jobs Act.

• Ways and Means Committee Vice Chairman Vern Buchanan (R-FL) was selected to lead the American Manufacturing tax working group.
• The members of Congress assigned to this team will examine the effects of pro-growth tax policies on the manufacturing sector.

Why it’s important: “Tax reform was rocket fuel for manufacturers: 2018, the first year the Tax Cuts and Jobs Act was in effect, was the best year for manufacturing job creation in the previous 21 years,” said NAM Managing Vice President of Policy Chris Netram. “But those gains are at risk as key tax provisions expire, making it more difficult for companies throughout the supply chain to hire, invest and grow. Congress must build on the promise of tax reform to ensure that manufacturing in America remains strong.”

• Earlier this month, Husco President and CEO and NAM Executive Committee member Austin Ramirez testified before the House Ways and Means Committee about the TCJA’s positive effect on manufacturing growth and the need for Congress to preserve the pro-growth business provisions of that legislation.
• Their expiration “mean[s] that pass-through businesses like Husco will have more of our income subject to a higher rate of tax,” Ramirez said. “At the same time, the pass-through deduction will expire completely, doubling down on the tax hikes that we face. … [A]llowing tax reform to sunset will undermine much of the progress we’ve made since 2017.”

What we’re doing: The NAM will be engaging with each of the tax working groups over the next several months to ensure that manufacturing-critical tax provisions are extended and reinstated.

• To get involved, reach out to NAM Senior Director of Tax Policy Alex Monié.