The U.S. Department of Commerce (“Commerce Department”) has recently issued its long-awaited reports relating to the investigations concerning the effects of imports of steel and aluminum on U.S. national security that it conducted pursuant to Section 232 of the Trade Expansion Act of 1962, as amended (“Section 232”). As discussed below, in both reports, which were publicly released on February 16, 2018, the Commerce Department made findings that the quantities and circumstances of imports of steel and aluminum threaten to impair U.S. national security, and in light of these findings, the Commerce Department recommended that President Trump impose significant restrictions on the imports of steel and aluminum that could include high tariffs and/or quotas.
In its report relating to the Section 232 investigation concerning steel (the “Steel Report”), the Commerce Department made several key findings relating to steel mill products (“Steel Products”). Among other things, the Commerce Department concluded that world steel-making capacity has increased 127 percent since 2000, while in the United States, six basic oxygen furnaces and four electric furnaces have closed during that same time period and employment in the U.S. steel industry has dropped by 35% since 1998. Significantly, the Commerce Department also found that recent global excess capacity is nearly 7 times the annual total of U.S. steel consumption, and that Chinese excess capacity alone exceeds the total U.S. steel-making capacity. Furthermore, the Commerce Department noted that, in addition to China, there are several other countries from which the United States imports high quantities of steel products and/or which import relatively low levels of U.S.-produced steel products, including Brazil, Canada, Mexico, South Korea, Vietnam, Thailand, Turkey and Russia.
Taking the above findings into consideration, the Commerce Department recommended in the Steel Report that President Trump consider taking one or more of the following actions in the interests of US national security:
- A tariff of at least 24% on all U.S. imports of Steel Products from all countries;
- A tariff of at least 53% on all U.S. imports of Steel Products from 12 countries (i.e., Brazil, China, Costa Rica, Egypt, India, Malaysia, South Korea, Russia, South Africa, Thailand, Turkey, and Vietnam), with quotas on Steel Products from all other countries equal to 100% of their 2017 exports to the US; or
- A quota on all Steel Products from all countries equal to 63% of each country’s 2017 exports to the US.
The tariffs and/or quotas would be in addition to any duties already in place, and each of the proposed remedies would apply measures to all countries and all Steel Products to prevent circumvention. President Trump is required to make a decision on the steel recommendations by April 11, 2018.
The Commerce Department also made a number of key findings and recommendations concerning a wide range of aluminum products (the “Aluminum Products”) in the report that it released relating to the Section 232 investigation pertaining to Aluminum Products (the “Aluminum Report”). In terms of findings, the Commerce Department concluded that, between 2013 and 2016, employment in the U.S. aluminum industry fell by 58%, 6 smelters were shut down, and only 2 of the 5 remaining smelters are operating at capacity. In addition, the Commerce Department noted that there is only one remaining U.S. producer of high-quality aluminum alloy needed for military and aerospace end-uses.
In light of the above findings, the Commerce Department recommended in the Aluminum Report that President Trump consider taking one or more of the following actions in the interests of U.S. national security:
- A tariff of at least 7.7% on all U.S. imports of Aluminum Products from all countries;
- A tariff of at least 23.6% on all U.S. imports of Aluminum Products from China, Hong Kong, Russia, Venezuela, and Vietnam, with quotas on Aluminum Products imported from all other countries equal to 100% of their 2017 exports to the US; or
- A quota on all U.S. imports of Aluminum Products from all countries equal to a maximum of 86.7% of their 2017 exports to the US.
The tariffs and/or quotas would be in addition to any duties already in place, and each of the proposed remedies would apply measures to all countries and all Aluminum Products to prevent circumvention. President Trump is required to make a decision on the aluminum recommendations by April 19, 2018.
As discussed above, President Trump is required to make decisions on the recommendations that have been proposed by the Commerce Department within the next two months. The decisions that he makes could have major implications for U.S. importers of steel or aluminum, especially ones that import those metals from certain countries (e.g., China, Russia, and Vietnam, among others). As such, U.S. companies that import steel or aluminum should consider reaching out to experienced international trade counsel who can advise on actions that could be taken to minimize disruptions or additional tariffs that could result from any actions taken by President Trump.
For additional information, please contact either of the following FisherBroyles Partners:
| Chris Pey
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