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President Trump Acts To Impose Stiff Steel and Aluminum Tariffs

(Updated Sept 2018)

On March 8, 2018, President Donald Trump announced 25% ad valorem tariffs on imported steel and 10% tariffs on imported aluminum from all countries, except Canada and Mexico, importing these products into the United States. These tariffs would be in addition to any tariffs already imposed on these products including antidumping and countervailing duties and take effect March 23, 2018.

On March 22, 2018, an additional Presidential Proclamation was made to also exclude Australia, Argentina, South Korea, Brazil Canada, Mexico and member countries of the European Union from the 25% ad valorem steel tariff and 10% ad valorem aluminum tariff until May 1, 2018.

April 30, 2018, President Trump issued additional Proclamations. In this proclamation, extensions are made to tariff exemptions for Australia, Argentina, South Korea and Brazil as a result of continuing and productive conversations with each country. In addition, South Korea (and possibly the other countries later) will have quotas imposed on steel imports to the U.S.

In this same proclamation, Canada, Mexico and the European Union are put on notice that the exemption for them will expire as of June 1, 2018 if no satisfactory agreement has been made prior and a new proclamation is issued.

On May 31, 2018, an additional Presidential Proclamation was published. This proclamation adds steel quotas for Argentina and Brazil beginning July 1, 2018. As for the aluminum tariff, now only Argentina and Australian aluminum imports are exempt but will have quotas for Argentina.

August 13, 2018, Turkey steel and aluminum imports get an additional 50% tariff imposed.

Section 232 Investigation / Findings and Recommendations On Steel and Aluminum

On April 19, 2017, the Secretary of Commerce initiated a Section 232 investigation on steel imports. “Section 232 investigations are initiated to determine the effects of imports of any articles on U.S. national security.” (commerce.gov) In this case, the Commerce Department is determining the effect of steel and aluminum imports on the national security.(commerce.gov). The Secretary of Commerce has 270 days to present the findings to the President. The findings were published on January 11, 2018. Here are links to those reports, key findings and the Department of Commerce Recommendations.

The Effect of Imports Of Steel On National Security

Here is a summary of the report as published by the Commerce Department.

Key Findings of the Steel Report:
• The United States is the world’s largest importer of steel. Our imports are nearly four times our exports.
• Six basic oxygen furnaces and four electric furnaces have closed since 2000 and employment has dropped by 35% since 1998.
• World steelmaking capacity is 2.4 billion metric tons, up 127% from 2000, while steel demand grew at a slower rate.
• The recent global excess capacity is 700 million tons, almost 7 times the annual total of U.S. steel consumption. China is by far the largest producer and exporter of steel, and the largest source of excess steel capacity. Their excess capacity alone exceeds the total U.S. steel-making capacity.
• On an average month, China produces nearly as much steel as the U.S. does in a year. For certain types of steel, such as for electrical transformers, only one U.S. producer remains.
• As of February 15, 2018, the U.S. had 169 antidumping and countervailing duty orders in place on steel, of which 29 are against China, and there are 25 ongoing investigations.

Recommendations of the Steel Report:
Secretary Ross has recommended to the President that he 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.

The tariffs and quotas would be in addition to any duties already in place. The report recommends that a process be put in place to allow the Secretary to grant requests from U.S. companies to exclude specific products if the U.S. lacks sufficient domestic capacity or for national security considerations. Any exclusions granted could result in changed tariffs or quotas for the remaining products to maintain the overall effect.

The Effect Of Imports of Aluminum On National Security

Key Findings of the Aluminum Report:
• Aluminum imports have risen to 90% of total demand for primary aluminum, up from 66% in 2012.
• From 2013 to 2016 aluminum industry employment fell by 58%, 6 smelters shut down, and only two of the remaining 5 smelters are operating at capacity, even though demand has grown considerably.
• At today’s reduced military spending, military consumption of aluminum is a small percentage of total consumption and therefore is insufficient by itself to preserve the viability of the smelters. For example, there is only one remaining U.S. producer of the high-quality aluminum alloy needed for military aerospace. Infrastructure, which is necessary for our economic security, is a major use of aluminum.
• The Commerce Department has recently brought trade cases to try to address the dumping of aluminum. As of February 15, 2018, the U.S. had two antidumping and countervailing duty orders in place on aluminum, both against China, and there are four ongoing investigations against China.

Recommendations of the Aluminum Report:
Secretary Ross has recommended to President Trump three alternative remedies for dealing with the excessive imports of aluminum. These would cover both aluminum ingots and a wide variety of aluminum products.

1 A tariff of at least 7.7% on all aluminum exports from all countries, or
2 A tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam. All the other countries would be subject to quotas equal to 100% of their 2017 exports to the United States, or
3 A quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.

Each of the three proposals is intended to raise production of aluminum from the present 48% average capacity to 80%, a level that would provide the industry with long-term viability. Each remedy applies measures to all countries and all steel products to prevent circumvention.
The tariffs and quotas would be in addition to any duties already in place. The report recommends that a process be put in place to allow the Secretary to grant requests from U.S. companies to exclude specific products if the U.S. lacks sufficient domestic capacity or for national security considerations. Any exclusions granted could result in changed tariffs or quotas for the remaining products to maintain the overall effect.

President Trumps Tariff Announcement
Based on the Section 232 reports and recommendations, President Trump on March 1, 2018 announced he is in favor of imposing 25% tariffs on steel imports and 10% tariffs on aluminum imports. These tariffs would be in addition to any duties already in place including antidumping and countervailing duties already imposed. The details of this announcement are expected next week.

Steel Products That Will Be Effected
* The scope includes steel products.
* Note that import data for steel products includes what are believed to be very small amounts of iron as well as steel, both of which are included in the HS codes covered in the scope.

The Section 232 Investigation on Steel included steel mill products (“steel”) which are defined at the Harmonized System (“HS”) 6-digit level as: 720610 through 721650, 721699 through 730110, 730210, 730240 through 730290, and 730410 through 730690, including any subsequent revisions to these HS codes. The following discontinued HS codes have been included for purposes of reporting historical data (prior to 2007): 722520, 722693, 722694, 722910, 730410, 730421, 730610, 730620, and 730660.

These steel products are all produced by U.S. steel companies and support various applications across the defense, critical infrastructure, and commercial sectors. Generally, these products fall into one of the following five product categories (including but not limited to):

Carbon and Alloy Flat Product (Flat Products): Produced by rolling semi- finished steel through varying sets of rolls. Includes sheets, strips, and plates.

Flat products are covered under the following 6-digit HS codes: 720810, 720825, 720826, 720827, 720836, 720837, 720838, 720839, 720840, 720851, 720852, 720853, 720854, 720890, 720915, 720916, 720917, 720918, 720925, 720926, 720927, 720928, 720990, 721011, 721012, 721020, 721030, 721041, 721049, 721050, 721061, 721069, 721070, 721090, 721113, 721114, 721119, 721123, 721129, 721190, 721210, 721220, 721230, 721240, 721250, 721260, 722511, 722519, 722530, 722540, 722550, 722591, 722592, 722599, 722611, 722619, 722691, 722692, 722693, 722694, 722699

(2) Carbon and Alloy Long Products (Long Products): Steel products that fall outside the flat products category. Includes bars, rails, rods, and beams.

Long products are covered under the following 6-digit HS codes: 721310, 721320, 721391, 721399, 721410, 721420, 721430, 721491, 721499, 721510, 721550,721590, 721610, 721621, 721622, 721631, 721632, 721633, 721640, 721650, 721699, 721710, 721720, 721730, 721790, 722520, 722620,722710, 722720, 722790, 722810, 722820, 722830, 722840, 722850, 722860, 722870, 722880, 722910,722920, 722990, 730110, 730210, 730240, 730290

(3) Carbon and Alloy Pipe and Tube Products (Pipe and Tube Products): Either seamless or welded pipe and tube products. Some of these products may include stainless as well as alloy other than stainless.

Pipe and Tube products are covered under the following 6-digit HS codes: 730410, 730419, 730421, 730423, 730429, 730431, 730439, 730451, 730459, 730490, 730511, 730512, 730519, 730520, 730531, 730539, 730590, 730610, 730619, 730620, 730629, 730630, 730650, 730660, 730661, 730669, 730690

(4) Carbon and Alloy Semi-finished Products (Semi-finished Products): The initial, intermediate solid forms of molten steel, to be re-heated and further forged, rolled, shaped, or otherwise worked into finished steel products. Includes blooms, billets, slabs, ingots, and steel for castings.

Semi-finished products are covered under the following 6-digit HS codes: 720610, 720690, 720711, 720712, 720719, 720720, 722410, 722490

(5) Stainless Products: Steel products, in flat-rolled, long, pipe and tube, and semi-finished forms, containing at minimum 10.5 percent chromium and, by weight, 1.2 percent or less of carbon, offering better corrosion resistance than other steel.

Stainless steel products are covered under the following 6-digit HS codes: 721810, 721891, 721899, 721911, 721912, 721913, 721914, 721921, 721922, 721923, 721924, 721931, 721932, 721933, 721934, 721935, 721990, 722011, 722012, 722020, 722090, 722100, 722211, 722219, 722220, 722230, 722240, 722300, 730411, 730422, 730424, 730441, 730449, 730611, 730621, 730640

Aluminum Products That Will Be Effected
For this report, aluminum is defined at the Harmonized Tariff Schedule (HTS) 4-digit level. The HTS codes covered by this report are listed in Table 2. In addition, two HTS codes at the ten digit level are included, covering aluminum castings and forgings.

Table 2 ‐ Harmonized Tariff Schedule For Aluminum Products

7601. Unwrought aluminum
7604 Aluminum bars, rods and profiles
7605 Aluminum wire
7606 Aluminum plates, sheets, and strip, of a thickness exceeding 0.2mm*
7607 Aluminum foil (whether or not printed, or backed with paper, paperboard, plastics or similar backing materials) of a thickness (excluding any backing) not exceeding 0.2mm
7608 Aluminum tubes and pipes
7609 Aluminum tube and pipe fittings
7616.99.51.60 Other articles of aluminum: castings
7616.99.51.70 Other articles of aluminum: forgings

*Note: This category includes can sheet for aluminum can packaging.
Source: U.S. International Trade Commission

The scope of this investigation does not include bauxite or alumina, which are feedstocks for production of primary (unwrought) aluminum. Also excluded from analysis are aluminum waste and scrap (HTS 7602) and aluminum powders and flakes (HTS 7603) as these represent different industrial sectors.

What Do We Do Now?
Check your product tariffs against the list above. These items will incur the higher tariff. If you have these products in route to the U.S., they could be subject to the higher tariff when they arrive based on the date the tariff is enacted and their arrival date.

We’ll know more next week when the recommendation is finalized. Until then, plan on the 25% tariff for steel and 10% tariff for aluminum. Our hope is we’ll have a more positive outcome for our customers when the dust settles.

Stay tuned!