ANNOUNCEMENT 20 Apr 2017

In March, 2018 President Trump imposed tariffs on steel and aluminum under the “national security” provision of U.S. trade law.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

The proclamation is at https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-steel-united-states/. See also https://www.whitehouse.gov/the-press-office/2017/04/20/presidential-memorandum-secretary-commerce and https://www.gpo.gov/fdsys/pkg/FR-2017-04-26/html/2017-08499.htm, and https://www.commerce.gov/news/press-releases/2018/02/secretary-ross-releases-steel-and-aluminum-232-reports-coordination, and https://www.whitehouse.gov/briefings-statements/remarks-president-trump-listening-session-representatives-steel-aluminum-industry/, and https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-will-protect-american-national-security-effects-unfair-trade-practices/, and https://www.whitehouse.gov/briefings-statements/president-trump-approves-section-232-tariff-modifications/, and https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-steel-united-states-2/, and https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-steel-united-states-3/ and https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-approves-section-232-tariff-modifications-2/ and https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-steel-united-states-4/ and https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-steel-united-states-6/ and https://www.cbp.gov/trade/quota/bulletins/qb-18-137-absolute-quota-steel-mill-articles-argentina-brazil-and-south-korea and https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/may/united-states-announces-deal-canada-and; for background on the section 232 law see https://www.bis.doc.gov/index.php/other-areas/office-of-technology-evaluation-ote/section-232-investigations and https://www.commerce.gov/news/press-releases/2018/01/statement-department-commerce-submission-steel-section-232-report and https://www.whitehouse.gov/presidential-actions/proclamation-adjusting-imports-steel-united-states/. See also https://www.wsj.com/articles/quotas-make-a-comeback-as-countries-seek-u-s-tariff-exemptions-1526031000 and https://insidetrade.com/inside-us-trade/sources-australia-averted-232-restrictions-exchange-monitoring. See also https://www.wto.org/english/docs_e/legal_e/25-safeg_e.htm#11.

Inception date: 23 Mar 2018 | Removal date: open ended
Still in force

Import tariff

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 complaint to the WTO).

The substance of the order is as follows:

  1. For the purposes of this proclamation, “steel articles” are defined at the Harmonized Tariff Schedule (HTS) 6‑digit level as:  7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90, including any subsequent revisions to these HTS classifications.
  2. In order to establish increases in the duty rate on imports of steel articles, subchapter III of chapter 99 of the HTSUS is modified as provided in the Annex to this proclamation.  Except as otherwise provided in this proclamation, or in notices published pursuant to clause 3 of this proclamation, all steel articles imports specified in the Annex shall be subject to an additional 25 percent ad valorem rate of duty with respect to goods entered, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on March 23, 2018.  This rate of duty, which is in addition to any other duties, fees, exactions, and charges applicable to such imported steel articles, shall apply to imports of steel articles from all countries except Canada and Mexico.
  3. The Secretary, in consultation with the Secretary of State, the Secretary of the Treasury, the Secretary of Defense, the United States Trade Representative (USTR), the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, and such other senior Executive Branch officials as the Secretary deems appropriate, is hereby authorized to provide relief from the additional duties set forth in clause 2 of this proclamation for any steel article determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality and is also authorized to provide such relief based upon specific national security considerations.  Such relief shall be provided for a steel article only after a request for exclusion is made by a directly affected party located in the United States.  If the Secretary determines that a particular steel article should be excluded, the Secretary shall, upon publishing a notice of such determination in the Federal Register, notify Customs and Border Protection (CBP) of the Department of Homeland Security concerning such article so that it will be excluded from the duties described in clause 2 of this proclamation.  The Secretary shall consult with CBP to determine whether the HTSUS provisions created by the Annex to this proclamation should be modified in order to ensure the proper administration of such exclusion, and, if so, shall make such modification to the HTSUS through a notice in the Federal Register.
  4. Within 10 days after the date of this proclamation, the Secretary shall issue procedures for the requests for exclusion described in clause 3 of this proclamation.  The issuance of such procedures is exempt from Executive Order 13771 of January 30, 2017 (Reducing Regulation and Controlling Regulatory Costs).
  5. (a)  The modifications to the HTSUS made by the Annex to this proclamation shall be effective with respect to goods entered, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on March 23, 2018, and shall continue in effect, unless such actions are expressly reduced, modified, or terminated. (b)  The Secretary shall continue to monitor imports of steel articles and shall, from time to time, in consultation with the Secretary of State, the Secretary of the Treasury, the Secretary of Defense, the USTR, the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, the Director of the Office of Management and Budget, and such other senior Executive Branch officials as the Secretary deems appropriate, review the status of such imports with respect to the national security.  The Secretary shall inform the President of any circumstances that in the Secretary’s opinion might indicate the need for further action by the President under section 232 of the Trade Expansion Act of 1962, as amended.  The Secretary shall also inform the President of any circumstance that in the Secretary’s opinion might indicate that the increase in duty rate provided for in this proclamation is no longer necessary.

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 providing 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 imports from Brazil, Mexico, Canada, the Republic of Korea or the European Union, see related state act.

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."

Background:

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:

  1. A global tariff of at least 24% on all steel imports from all countries, or
  2. A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or
  3. A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.

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. In addition to the arrangements made with Argentina, Brazil, and Souh Korea (see next intervention), that speculation was supported by press reports 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. On May 6, 2019 President Trump determined that it is necessary and appropriate to remove the higher tariff on steel imports from Turkey imposed by Proclamation 9772, and to instead impose a 25 percent ad valorem tariff on steel imports from Turkey, commensurate with the tariff imposed on such articles imported from most countries.)

On May 17, 2019 the United States reached an agreement with Canada and Mexico to remove the Section 232 tariffs for steel and aluminum imports from those countries and to remove all retaliatory tariffs imposed on American goods by those countries. The agreement provides for what the USTR called “aggressive monitoring and a mechanism to prevent surges in imports of steel and aluminum,” such that if “surges in imports of specific steel and aluminum products occur, the United States may re-impose Section 232 tariffs on those products. Any retaliation by Canada and Mexico would then be limited to steel and aluminum products.”

AFFECTED SECTORS