On Thursday, March 8, President Trump officially signed two proclamations enacting tariffs of 25 percent on steel and 10 percent on aluminum. The tariffs are set to take effect on March 23, 2018, and contain an initial exemption for Canada and Mexico, as the administration seeks broader trade concessions from both countries as it renegotiates the North American Free Trade Agreement (NAFTA).
This decision, designed to protect U.S. metal producers from unfairly traded imports, culminates a nearly 11-month Commerce Department 232 investigation into whether imports of steel and aluminum endanger U.S. national security. In February, the Commerce Department announced its findings that imports of these metals do pose a threat. AFS submitted comments last year to the department on its investigation and highlighted trade challenges facing the U.S. metalcasting industry. AFS urged the administration to include iron, steel, and aluminum castings in the investigation. The final tariffs did not include steel and iron castings, but did include aluminum castings. AFS continues to communicate with Commerce Department officials and members of Congress on potential ramifications of the tariffs.
Many AFS members are reporting that they are worried that their scrap steel and aluminum prices will rise significantly, and some are already experiencing price increases. In addition, some foundries are very concerned that their customers will be hurt by the tariffs and shift production overseas, resulting in these customers simply importing finished goods and losing business to overseas competitors.
Here is an overview of the key provisions contained in the proclamations:
Effective Date: The tariffs will take effect on March 23, 2018 (applies to goods entering the customs territory of the U.S. or withdrawn from a warehouse for consumption on or after that date).
- Scope of the steel products is defined as HTS codes: 7206.10 through 7216.50; 7216.99 through 7301.10; 7302.10; 7302.40 through 7302.90; and 7304.10 through 7306.90. These include bar, rod, wire, ingot, flat, rolled, etc., but no downstream products and steel castings are not included.
- Scope of the aluminum products is defined as HTS codes: 7601; 7604 through 7609; and HTS 7616.99.51.60 (aluminum castings). This includes aluminum in all its basic forms, as well as castings under these HTS codes.
- The president will have the discretion to add or subtract countries and raise and lower the tariffs at any time.
- The tariffs will not apply to imports from Canada and Mexico initially so that U.S. officials can assess progress toward a new NAFTA.
- Other countries with a “security relationship” to the U.S. may seek exemptions by opening talks with the administration on “alternative ways” to address the threats the administration alleges their products pose to national security.
Exclusion Process: No later than Monday, March 19, the Secretary of Commerce will issue procedures for specific product exclusion requests. Product exclusions may be made only by a U.S. party. Relief will be provided for any covered product:
- “determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality”; or,
- “based upon specific national security considerations”.
The European Union (EU) said it would file a complaint with the World Trade Organization (WTO), which would then need to determine whether the tariffs violate its rules. The EU also issued a proposed list of American goods it would tax in retaliation, including Harley-Davidson motorcycles, bourbon whiskey, Levi's jeans, peanut butter, cranberries, and host of other products. There's also a chance countries will circumvent the WTO — just as the Trump administration did when it instituted the tariffs unilaterally.
Stephanie Salmon
Vice President Government Affairs
American Foundry Society - Washington Office
202-452-7135
ssalmondc@gmail.com