ANNOUNCED AS TEMPORARYNo
On March 8, 2018 President Trump signed an order providing for the imposition of 25% tariffs on imports of steel from countries other than Canada and Mexico (pending renegotiation of NAFTA). The action was taken in the name of national security, although the president claimed in his remarks that the imports in question had been dumped and also alluded to the "Buy American" principle. The restrictions will take effect on March 23, 2018. He also stated that the order provided a means for the removal of barriers for countries that reached agreements with the United States, directing U.S. Trade Representative Lightizer to lead these negotiations. The president implied that the negotiations might deal not just with trade issues, but also defense spending. It is unclear which countries may respond to this announcement by entering into such negotiations, and which may respond by imposing retaliatory measures on imports from the United States (with or without first bringing a formal complaints to the WTO).
The substance of the order is as follows:
On March 22, 2018 President Trump temporarily suspended additional tariffs on steel and aluminum products with respect to imports from the 28 member countries of the European Union as well as Argentina, Australia, Brazil, Canada, Mexico, and Korea. The tariffs took effect on March 23 with respect to shipments from all other countries.
On April 30, 2018 the president signed an executive order providinng as follows:
5. The United States has agreed in principle with Argentina, Australia, and Brazil on satisfactory alternative means to address the threatened impairment to our national security posed by steel articles imported from these countries. I have determined that the necessary and appropriate means to address the threat to national security posed by imports of steel articles from Argentina, Australia, and Brazil is to extend the temporary exemption of these countries from the tariff proclaimed in Proclamation 9705, in order to finalize the details of these satisfactory alternative means to address the threatened impairment to our national security posed by steel articles imported from these countries. In my judgment, and for the reasons I stated in paragraph 10 of Proclamation 9711, these discussions will be most productive if steel articles from Argentina, Australia, and Brazil remain exempt from the tariff proclaimed in Proclamation 9705, until the details can be finalized and implemented by proclamation. Because the United States has agreed in principle with these countries, in my judgment, it is unnecessary to set an expiration date for the exemptions. Nevertheless, if the satisfactory alternative means are not finalized shortly, I will consider re-imposing the tariff.
6. The United States is continuing discussions with Canada, Mexico, and the EU. I have determined that the necessary and appropriate means to address the threat to the national security posed by imports of steel articles from these countries is to continue these discussions and to extend the temporary exemption of these countries from the tariff proclaimed in Proclamation 9705, at least at this time. In my judgment, and for the reasons I stated in paragraph 10 of Proclamation 9711, these discussions will be most productive if steel articles from these countries remain exempt from the tariff proclaimed in Proclamation 9705.
7. For the reasons I stated in paragraph 11 of Proclamation 9711, however, the tariff imposed by Proclamation 9705 remains an important first step in ensuring the economic stability of our domestic steel industry and removing the threatened impairment of the national security. As a result, unless I determine by further proclamation that the United States has reached a satisfactory alternative means to remove the threatened impairment to the national security by imports of steel articles from Canada, Mexico, and the member countries of the EU, the tariff set forth in clause 2 of Proclamation 9705 shall be effective June 1, 2018, for these countries.
On May 31, 2018 the president signed an executive order modifying the application of these restrictions. The order provided that as of June 1, 2018, tariffs will no longer be suspended for steel or aluminum imports from exico, Canada, or the European Union.
On August 29, 2018 President Trump signed a proclamation setting out procedures for granting exemptions from these tariffs. It provides in part that the secretary of commerce may "provide relief from the quantitative limitations ... in limited circumstances."
This case began on an April 27, 2017 when President Trump signed a presidential memorandum for the secretary of commerce, directing the initiation of a case under the “national security” provision of U.S. trade law. Section 232(b)(1)(A) of the Trade Expansion Act of 1962 provides broad authority for the imposition of restrictions on imports that are found to impair national security, typically in cases where those imports are alleged to suppress domestic production and/or lead to dependence on foreign sources for items that are considered vital to national security. The statute and its predecessors date to the 1950s, and has often been associated with energy security. It has rarely been invoked, and it reached its high-water mark in the 1970s and 1980s.
The law may be invoked if the secretary of commerce finds that steel is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security. Such a finding may lead him to recommend actions and steps that should be taken to adjust steel imports so that they will not threaten to impair the national security; the imposition of those measures would be a policy decision. The secretary has up to 270 days to conduct the investigation. The memorandum directed the secretary of commerce to base his determination on such factors as —
the domestic production of steel needed for projected national defense requirements; the capacity of domestic industries to meet such requirements; the existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense; the requirements of growth of such industries and such supplies and services, including the investment, exploration, and development necessary to assure such growth; and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries and the capacity of the United States to meet national security requirements[.]
Other factors to be taken into account include “the close relation of the Nation's economic welfare to our national security, and consider the effect of foreign competition in the steel industry on the economic welfare of domestic industries,” “any substantial unemployment, decrease in government revenues, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive steel imports,” and “the status and likely effectiveness of efforts of the United States to negotiate a reduction in the levels of excess steel capacity worldwide.”
On February 16, 2018 the U.S. Department of Commerce released the results of its investigations into the national-security impact of imports of steel mill products and from imports of wrought and unwrought aluminum. The department found that the quantities and circumstances of steel and aluminum imports “threaten to impair the national security,” as defined by Section 232. The president is required to make a decision on the steel recommendations by April 11, 2018, and on the aluminum recommendations by April 19, 2018.
The recommendations of the steel report propose that the president consider the following alternative remedies to address the problem of steel imports:
Each of these remedies is intended to increase domestic steel production from its present 73% of capacity to approximately an 80% operating rate, the minimum rate needed for the long-term viability of the industry. Each remedy applies measures to all countries and all steel products to prevent circumvention.
Some observers believe that the original intent behind the Section 232 investigation was to coerce steel- and aluminum-exporting into the negotiation of an orderly marketing arrangement -- that is, a global quota regime -- as a means of managing excess capacity in the metals sector. That speculation was supported by press reports in early 2018 indicating that Korea had agreed to such limits on a bilateral basis, as well as indications later in the year that Australia had averted tariffs by agreeing to the imposition of a monitoring regime. That latter arrangement bears some of the hallmarks of a voluntary export restraint, albeit one that is not formally acknowledged by either the U.S. or Australian governments and for which no precise limits are publicly known. There remains speculation that the United States may not lift the tariffs on other partners without reaching some arrangement that restricts trade on a putatively voluntary basis, whether on a bilateral or a collective basis. That potential was hinted at in the aforementioned August 29, 2018 proclamation signed by President Trump, which also states that,
The United States continues to hold discussions with countries on satisfactory alternative means to address the threatened impairment to our national security posed by steel articles imports. Should these discussions result in an agreement concerning such alternative means, I will take further action as appropriate.
(In a related development, on August 10, 2018 President Trump wrote the following tweet: "I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!" While this action builds on the Section 232 tariffs on steel and aluminum, the underlying cause concerns a dispute between the U.S. and Turkish governments over the detention of an American citizen. GTA does not report on trade sanctions that are imposed for reasons of foreign policy.)
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