July 19, 2023

Cassidy, Menedez Renew Bipartisan Effort to Exempt International Goods Already in Transit from Surprise Tariffs

WASHINGTON – U.S. Senators Bill Cassidy, M.D. (R-LA) and Bob Menendez (D-NJ) reintroduced the bipartisan For Accurate Import Relief to Aid Retailers and Importers of Foreign Freights Act of 2023 or FAIR TARIFF Act of 2023. This legislation ensures American companies are not the subject of surprise taxes because of tariffs issued on “goods on the water” that have already been shipped, but arrive in the United States after tariffs go into effect.

“Referees shouldn’t change the rules in the middle of a game and tariffs shouldn’t change in the middle of a shipment. Employers need certainty. This bill gives certainty,” said Dr. Cassidy.

“Tariffs are a useful tool for pushing foreign governments to fulfill their commitments to American workers and companies, as well as creating political pressure on governments that fall short of their commitments by forcing foreign producers to make price concessions or risk losing U.S. customers. However, American consumers and businesses should not be on the hook for extra costs as a result of tariffs levied once goods are already in transit,” said Senator Menendez. “Our bipartisan FAIR TARIFF Act will exempt goods in transit from additional tariffs, something that should be standard practice and will help protect the interests of American consumers and companies.” 

Under current law, the U.S. Trade Representative (USTR) has discretion as to whether to apply new tariffs to goods already in transit. In May 2019, when USTR published 25 percent tariffs on $200 billion worth of products from China, U.S. companies clamored for a “goods on the water” exemption, which was eventually granted. However, in October 2019 and again in January 2021, USTR placed 25 percent tariffs on over $7.5 billion of European wine, spirits, food, and other products and implemented both sets of tariffs within two weeks. Despite pleas by affected U.S. businesses it gave no “goods on the water” exemption, forcing many U.S. companies to pay a surprise 25 percent tax bill that U.S. buyers, especially small importers, simply cannot factor into purchase negotiations or afford to pay. The FAIR TARIFF Act will bring consistency to U.S. trade actions and ensure that the intended targets pay the price.

Several organizations, including the U.S. Chamber of Commerce, National Restaurant Association, Wine & Spirits Wholesalers of America, North American Olive Oil Association, Association of Food Industries, U.S. Wine Trade Alliance, New York State Distillers Guild, Agriculture Transportation Coalition, American Craft Spirits Association, American Distilled Spirits Alliance, Distilled Spirits Council of the United States, Napa Valley Vintners, National Association of Beverage Importers, National Association of Wine Retailers, Wine America, Wine and Spirits Shippers Association, and Uncorked New Orleans support the FAIR Tariff Act. 

The U.S. Chamber of Commerce strongly supports the Fair Tariff Act of 2023. It’s simple, practical, and — as the name says — fair. There’s never a good policy reason to slap tariffs on ‘goods on the water,’ and this legislation will ensure that doesn’t happen in the future,” said John Murphy, Senior Vice President for International Policy of the U.S. Chamber of Commerce.

“The economic squeeze on restaurant operators isn’t letting up, but relief from these additional – and often surprise – costs caused by ‘goods on the water’ tariffs would be welcome. We appreciate Sens. Menendez and Cassidy’s leadership in getting the FAIR TARIFF Act of 2023 introduced and hope that Congress will move quickly to pass it,” said Sean Kennedy, Executive Vice President for Public Affairs of the National Restaurant Association.

“Senators Menendez and Cassidy are standing up for consumers by introducing the FAIR TARIFF Act. Independent family-owned wine and spirits stand with the Senators and our coalition partners in urging the Senate to quickly pass this important legislation,” said Francis Creighton, President and CEO, Wine & Spirits Wholesalers of America.

“Retaliatory tariffs are an important tool in trade diplomacy, but they should target producers in the offending country first, not American importers. In 2019, many of our members had goods on the water when the U.S. imposed tariffs on Spanish olive oil in connection with the Airbus trade dispute. The Fair Tariff Act is a reasonable and balanced approach to addressing this problem, refunding those American importers who were unfairly caught in the crossfire in 2019, and limiting the possibility that it can happen again in the future,” said Joseph R. Profaci, Executive Director of the North American Olive Oil Association. 

“The FAIR TARIFF Act would prevent a recurrence of what happened to AFI members in 2019, when a very limited allowance was granted for goods to arrive before newly announced tariffs went into effect in the Airbus trade dispute – in spite of the fact that allowances has been granted in other prior disputes. Tariffs are paid by U.S. companies, not the foreign shippers, and many AFI members had had no recourse to avoid the financial burden caused by lack of such an allowance,” said Bob Bauer, President of the Association of Food Industries.

“Restaurants, wine importers, wholesalers and retailers in all fifty states need the protection and relief that will come with The Fair Tariff Act. These businesses were hurt by tariffs applied to goods they had already purchased. Passage of the bill would make a real impact on huge numbers of small, family-owned businesses around the United States. The USWTA cheers this well-reasoned, bipartisan solution to a fixable problem,” said Ben Aneff, President of the US Wine Trade Alliance.

“Uncorked strongly supports the Fair Tariff Act of 2023. It’s simple, practical, and — as the name says — fair. There’s never a good policy reason to slap tariffs on ‘goods on the water,’ and this legislation will ensure that doesn’t happen in the future,” said David M. Kenney, Vice President and Partner of Uncorked, New Orleans, Louisiana.

“The New York State Distillers Guild is pleased to support the Fair Tariff Act, a common-sense measure that will materially help small producers across many sectors participate fruitfully in the global economy,” said Teresa Casey, Executive Director of the New York State Distillers Guild.