Trump’s tariffs put pressure on insurance companies and premiums
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Trump’s tariffs put pressure on insurance companies and premiums
With help from Adam Behsudi
ON TAP TODAY: One of the side effects of President Donald Trump’s tariffs could be higher premiums for auto and homeowner’s insurance. Get ready to see opposition to the new U.S.-Canada-Mexico Agreement from the Sierra Club and other environmental groups when it is put to a vote in Congress. Talks are taking place this week with United Kingdom trade officials to lay the groundwork for a bilateral deal to be ready for when Brexit happens. And see who’s who on Senate Finance and Ways and Means after the midterms. Start here:
TRUMP’S TARIFFS PUT PRESSURE ON INSURANCE COMPANIES — AND PREMIUMS: Whether you pay insurance premiums once a month, twice a year or annually, rates could be going up as a result of Trump’s tariffs on steel, aluminum and $250 billion worth of Chinese goods, industry experts told yours truly.
Insurers are expected to pass along the added costs to their customers. “We’re thinking this tariff issue is going to emerge as a pretty significant cost issue for us and ultimately to our policyholders,” David Snyder, vice president for international policy at the Property Casualty Insurers Association of America, said.
Tallying up the insurance bill: All imported vehicles and parts could be socked with 25 percent added taxes if an ongoing investigation into auto imports on national security grounds finds reason to impose tariffs. If that happens, it could translate into $3.4 billion in higher premiums for personal auto insurance, as well as significant increases for commercial auto insurance, PCI and two other insurance associations wrote in a letter to Trump this summer.
Other hits to consumer pocketbooks: Trump has already imposed a 25 percent on some Chinese-made auto parts, including catalytic converters, compressors, bearings and speed sensors.
He’s also imposed a 10 percent duty that will rise to 25 percent on Jan. 1 on an even longer list. That includes products needed for car repairs after accidents such as vehicle sensors; brake pads, drums, rotors and hoses; automotive tires; bearings; mufflers; drive axles; suspension parts; gaskets; safety glass; and accessories such as floor mats, wipers and mirrors. To read more about what tariffs mean for auto and homeowner’s insurance policies, click here.
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GREEN GROUPS SEEK TO DEFEAT USMCA: The Sierra Club, Friends of the Earth and other environmental groups plan to actively oppose congressional approval of the U.S.-Mexico-Canada Agreement, even if a no-vote would increase chances that Trump will withdraw from NAFTA.
“We’re sticking with what we’ve been calling for since the beginning, which is that we need to replace NAFTA,” said Ben Beachy, a trade specialist at the Sierra Club. “This is not a NAFTA replacement. So we think they should go back to the drawing board.”
USTR spokesman Jeffrey Emerson defended the USMCA. “It actually raises the environmental standards beyond what they are in NAFTA or the TPP, with strengthened obligations in many areas such as wildlife trafficking and illegal, unreported and unregulated fishing, as well as first-ever obligations to address pressing environmental issues such as marine litter and air quality,” Emerson said. For more on the debate, click here.
TRUMP TO END MAURITANIA’S TARIFF BREAKS OVER SLAVERY: At the urging of the AFL-CIO labor federation, Trump notified Congress on Friday evening that he plans to terminate Mauritania’s eligibility for duty-free access to the United States under the African Growth and Opportunity Act because of the country’s failure to eradicate hereditary slavery.
“Forced or compulsory labor practices like hereditary slavery have no place in the 21st century,” Deputy U.S. Trade Representative C.J. Mahoney said in a statement announcing the action.
A positive signal for international labor issues?: The action could give Democrats more confidence that Trump will aggressively enforce labor provisions of trade agreements as the administration pushes for approval next year of the new U.S.-Mexico-Canada agreement.
Still, Mauritania has one of the smallest economies in Africa and does little trade with the United States. Last year, Mauritania exported only about $62 million worth of goods here and imported about $128 million of U.S. goods.
THE BRITISH ARE HERE! THE BRITISH ARE HERE!: As the United Kingdom inches toward its future outside the European Union, the United States continues to lay the groundwork for a “free, fair and reciprocal” trade agreement with its former colonial master.
The fifth meeting of U.S. and U.K. Trade and Investment Working Group kicked off in Washington on Friday and wraps up on Wednesday. The two sides also held the third meeting of their dialogue on boosting trade opportunities for small- and medium-size enterprises in New York City on Friday.
CHINA, INDIA, TURKEY COULD GET IRAN SANCTIONS WAIVER: The Trump administration is expected to announce today that it will delay for six months implementation of secondary sanctions on China, India, Turkey and five other countries to give them more time to end their oil purchases from Iran. U.S. Secretary of State Mike Pompeo declined to identify the eight countries during a phone call with reporters on Friday, but he said the EU was not on the list. Stay tuned for further details.
AFTER MIDTERMS, CONGRESSIONAL STAFF MUSICAL CHAIRS: Trade watchers may want to know who will be handling policy issues if the House flips to Democratic control. For the Senate Finance and House Ways and Means committees, a staff shakeup could occur but it’s more likely that the same officials will maintain their positions albeit in new roles depending on the outcome of the election:
— If the House flips to Democrats, Rep. Richard Neal (D-Mass.) will take the gavel of Ways and Means, the all-powerful tax-writing committee that has jurisdiction over trade issues. That could put Katherine Tai in the position of chief trade counsel for the majority. She has served as Democratic chief counsel since January 2017. She joined the committee in 2014 after eight years at the Office of the U.S. Trade Representative.
— Whether they are in the majority or minority, Ways and Means Republicans will likely continue to rely on the expertise of Angela Ellard, who has served as Republican chief trade counsel/staff director since 1998 and has been a fixture on the committee since 1995.
— For the Senate Finance Committee, it’s unlikely that Sen. Ron Wyden (D-Ore.) will take the gavel. Regardless, Jayme White, chief adviser on international competitiveness and innovation, is expected continue his role as the top trade staffer for Democrats on the panel. White has been a Finance staffer since 2009.
— For Republicans in Senate Finance, there will be a new leader with the retirement of Sen. Orrin Hatch (R-Utah). It’s unclear yet who will be the GOP’s top trade staffer on the panel, but Shane Warren has been serving as Republican chief trade counsel since June 2017. Warren, also an alumnus of USTR’s legal division, has been on Finance Committee staff since 2013.
EU AGRICULTURE MEASURES GET SLAMMED AT WTO: The European Union was taken to task over two new measures it has taken. One involves setting new maximum residue levels for certain pesticides. In another case, it was criticized for adopting a European Court of Justice ruling that allows plants cultivated by a scientific process known as mutagenesis to fall under EU laws restricting GMOs.
The pesticides issue: Several member nations, including the U.S., said the EU’s pesticides policies were not based on scientific evidence. The complaints were made during a Nov. 1-2 meeting of the World Trade Organization’s Sanitary and Phytosanitary Committee. Brussels pushed back, saying that information showed that the chemicals presented cancer risks if they were subject to high-temperature processing conditions.
Modified crops issue: The U.S. took the lead in complaining that a European court ruling on mutagenesis puts up unjustified trade barriers and stifle new research for reducing hunger and malnutrition. Mutagenesis is the process of editing an organism’s genes without introducing DNA from other species. The EU, however, says the court ruling complied with WTO rules and asserted that it is free to choose its policies in this area.
— Farmers brace for what’s next as soybean sales to China tank, the Star Tribune reports.
— Chinese exporters are rushing to fill orders ahead of U.S. tariff increases, the South China Morning Post reports.
— Micron has been locked in bitter trade secrets dispute with Chinese rival called Fujian Jinhua. Now it has the US government in its corner, CNN Business reports.
— Trump-Xi meeting at G-20 is more likely to be the start of talks on a deal, rather than the end, Bloomberg reports.
— Lighthizer thinks the key to boosting U.S. industry is playing hardball with the Chinese, the Los Angeles Times reports.
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