Three Things to Know: June 9

This week's information compiled by your SC Chamber team includes: 
China Exports to U.S. Continue to Decline, SCOTUS Releases Decision that Places New Restriction on Union Strikes, Legislative Update

 1. China Exports to U.S. Continue to Decline

China’s share of trade with the United States has continued to decline, accounting for just 15.4% of U.S. imports for the 12 months ended April, their smallest share since October 2006. This is in part due to U.S. companies looking for alternatives to Chinese manufacturers. Lawrence Werther, the chief U.S. economist at Daiwa Capital Markets America, stated that “the U.S. is seeking to diversify trade channels.” He also added that part of the driving force behind this change was that “the relationship [with China] has turned more adversarial in the last few years.” The geopolitical tensions between the U.S. and China started to escalate after the Trump administration imposed tariffs on thousands of goods from China, and those have stayed in place during the Biden administration.

While China’s share has decreased, European nations, Mexico, and other nations have seen an increase in trade with the U.S. A group of 25 Asian and South Asian countries accounted for 24.7% of imports for the 12 months ended in April. Experts say that another part of the reason China’s exports have decreased is because the country is still struggling to recover from the COVID-19 pandemic. China’s declining exports is not exclusively a problem with the U.S., their exports to Europe also fell to 26.6%. However, exports to Russia have more than doubled in the same timeframe.

2.  SCOTUS Releases Decision that Places New Restriction on Union Strikes

On June 1, the United States Supreme Court released a decision in Glacier Northwest v. Teamsters, holding that the National Labor Relations Act (NLRA) does not preempt a state law tort claim that alleges intentional destruction of property, especially when the union fails to take reasonable precautions to protect against foreseeable and imminent harm. This decision from SCOTUS effectively places a new limitation on employees’ right to strike.

Glacier Northwest is a concrete seller and supplier, who loads concrete mixture in their trucks and makes same day deliveries. If it is not delivered in time the concrete can harden, making the product unusable and the truck inoperable. The truck drivers for Glacier were represented by the International Brotherhood of Teamsters Union, who ordered the drivers to strike and abandon their trucks after concrete had been loaded into the vehicles. Glacier was able to remedy the situation in time to prevent damage to their trucks, but incurred costs to dispose of the concrete before it hardened, as well as experienced loss of revenue due to the concrete becoming unusable. Following the strike, Glacier sued the Teamsters in state court for damages which was dismissed on the grounds that the strike was protected by the National Labor Relations Act (NLRA) and preempted by federal law. The state court of appeals reversed the trial court’s decision on similar grounds as the ultimate Supreme Court decision relating to failure to take reasonable precautions to protect against foreseeable harm. The Washington Supreme Court reversed Appellate Court’s ruling, holding that determinations about whether protections under the NRLA overrides state tort liability should be left to the National Labor Relations Board (NLRB).

Ultimately, the Supreme Court concluded that by abandoning their trucks without telling anyone, the drivers left those trucks on a “path to destruction.” The Court further stated that the timing of the strike “suggests that [the Union] failed to take reasonable precautions to avoid foreseeable, aggravated, and imminent harm.” This decision seems to set the precedent that the NLRA will not protect conduct from Unions in situations where affirmative steps are taken to damage an employer’s property. While there have been numerous cases in which the Court has held that the NLRA preempts certain state laws, this decision makes clear that the NLRA does not block employers from bringing particular state law tort actions and will ultimately make it easier for employers to pursue damage claims against unions in state court.

3. Legislative Update

Members of the House of Representatives returned to Columbia this week for a quick day of session, while House and Senate conferees met to work on conference reports on items like the FY2023-24 budget. Notable actions taken this week included:

• FY2023-24 Budget (H.4300) – On Thursday, a conference committee comprised of three House members and three Senators adopted and approved a compromise version of the state’s $13.8 billion FY2023-24 budget. The agreement comes on the heels of weeks-long negotiations between House and Senate budget writers. SC Chamber priority items included in the compromise version of the budget include:
• $151.4 million to increase starting teacher pay by $2,500 to $42,500, and additional funds for certain teacher salary increases.
• $96.2 million to fund the first phased-in reduction of the individual income tax rate from 6.5% to 6.4%.
• $93.7 million in technical college scholarships for critical-needs jobs through the SC Workforce Industry Needs Scholarship Program (SCWINS).
• $500,000 in recurring operational funds for the Be Pro Be Proud program.

Both the House and Senate must now take up and pass the amended version of the budget before it can be sent to Governor Henry McMaster’s desk for his signature or for any line-item vetos.

• Fentanyl Trafficking (H.3503) – On Wednesday, the House concurred in Senate amendments and sent to Gov. McMaster’s desk a bill that would add a criminal penalty for trafficking fentanyl. Individuals convicted of possessing at least four grams of drugs containing fentanyl will face a minimum sentence of at least seven years and a $50,000 fine. A second offense would carry a minimum sentence of at least twenty-five years. The bill also prohibits anyone who has been convicted of distributing, making or trafficking illegal drugs from owning a firearm. Gov. McMaster had urged the General Assembly to send him legislation that would make it illegal for convicted felons to carry firearms. The bill now awaits the Governor’s signature.
• Septic Tank Field Evaluation Tests (H.4486) – On Wednesday, the House advanced a bill that would authorize the Department of Health and Environmental Control (DHEC) to create a pilot program to allow septic tank installers to conduct septic tank field evaluation tests in lieu of agency staff. Septic tank installers participating in the program must hold a valid license, must be registered with DHEC, and be granted written approval by DHEC. The bill now heads to the Senate.

The Senate is scheduled to come into session next Wednesday, June 14^th while the House has not yet scheduled their return.