Cassidy, Menendez Introduce Bill to Prevent Surprise Costs on American Businesses

WASHINGTON – U.S. Senators Bill Cassidy, M.D. (R-LA) and Bob Menendez (D-NJ) introduced the For Accurate Import Relief To Aid Retailers and Importers of Foreign Freights (FAIR TARIFF) Act of 2022, which prevents surprise taxes from being levied on American businesses resulting from tariffs issued on “goods on the water” that have already been shipped but land in the U.S. 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. 

“While the goal of tariffs is to pressure foreign governments to live up to their commitments to American workers and companies and to create political pressure on an offending government by forcing foreign producers to make price concessions or lose U.S. customers, tariffs applied to ‘goods on the water’ do not force foreign suppliers to pay additional tariffs, rather the burden falls entirely on the U.S. buyer and companies,” said Sen. Menendez. “Our bipartisan FAIR TARIFF Act will exempt goods in transit from additional tariffs, something that should be standard practice.”

Background

Under current law the U.S. Trade Representative (USTR) has discretion as to whether to apply new tariffs to goods 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 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. companies, 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.