Congress Set to Move “Chips” Bill, Punts Tariff Relief Renewal Until The Fall

July 25, 2022

The grand plan was to attach trade measures to a bill intended to ease the semiconductor shortage, using manufacturing subsidies and tax credits to increase domestic production. Congress could kill two birds with one stone – help the struggling domestic semiconductor industry and provide badly needed tariff relief to lower consumer costs. In the end, Congress kicked tariff relief down the road and will vote on just the semiconductor bill this week. Legislation to renew the Miscellaneous Tariff Bill (MTB), re-authorize the Generalized System of Preferences (GSP) program, and re-open a transparent Section 301 exclusion process for Chinese imports will have to wait… again. All three tariff relief measures expired at the end of 2020 and have been awaiting Congressional action ever since.

Disagreements over human rights, environmental standards, and other issues slowed negotiations and ultimately led to Congress dropping the tariff relief provisions from the semiconductor bill. The final passage of a trimmed-down semiconductor manufacturing and science-focused economic competitiveness package is expected this week. The Tariff Relief measures will now be taken up in the fall. Complicating matters further, Democrats have renewed their push to pass a slimmed-down ‘Build Back Better’ package using Reconciliation to avoid the 60-vote requirement in the Senate. Reconciliation allows Democrats to move stalled portions of President Biden’s agenda through Congress with no Republican support. Republicans are not happy about the Democrats’ use of Reconciliation to approve their policy priorities and separating semiconductors from trade bills, but remain committed to renewing tariff relief programs. Kevin Brady, the top Republican on the House Ways & Means Committee, made clear his desire to renew MTB and GSP:

Brady said he would continue talking with Democrats about how to advance trade provisions left out of the final chips bill, particularly the Generalized System of Preferences and Miscellaneous Tariff Bill, two tariff exemption programs that have been expired for months. But there won’t be an agreement on Trade Adjustment Assistance, an aid program for victims of outsourcing, without Trade Promotion Authority to open new markets, he said.

With Congress set to vote on the semiconductor chip innovation and competitiveness bill this week, the negotiations to resolve differences on the MTB, GSP, China Exclusions, and other trade matters will continue through August. SFIA remains dedicated to securing tariff relief for member products and will continue to press Congress to get the job done.

For more information, please contact Bill Sells, SVP Government Relations & Public Affairs, at [email protected].

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