As reported in our post of January 25, 2019, members of the 116th session of Congress are seeking ways to address President Donald Trump’s authority to unilaterally impose tariffs under various statutes. This trend continued on January 30, 2019, with the bipartisan introduction of the Bicameral Congressional Trade Authority Act. Introduced by Sens. Mark Warner (D-VA) and Pat Toomey (R-PA), this bill would restore to Congress its Article I constitutional authority over foreign trade and commerce, specifically focusing on tariffs implemented under the claim of “national security.” The senators stated that recent Trump administration Section 232 actions have been economically disruptive and have damaged U.S. relationships with its allies, including Mexico, Canada, Japan, the EU and India. Continue Reading Additional Legislation Introduced in Congress Seeks to Curtail Executive Branch’s Authority to Implement Section 232 Tariffs
International trade and international trade disputes were a predominant focus of President Trump and his trade officials throughout 2018. Thompson Hine’s Trump and Trade team has prepared a slide presentation to provide our readers with a broad overview of the most significant trade actions taken by the Trump administration last year. From the renegotiation of the North America Free Trade Agreement (NAFTA), which is now the U.S.-Mexico-Canada Agreement (USMCA), to the many ongoing trade actions involving imports of steel, aluminum and products from China, it was a busy year. This overview concisely presents details and the current status of the president’s primary trade activities.
The presentation includes information on the current status of President Trump’s major trade actions, including NAFTA/USMCA negotiations, the U.S.-Korea Free Trade Agreement, and other bilateral trade negotiations with Japan, the European Union and the United Kingdom. It also provides details on major trade and tariff actions occurring in 2018, such as the Section 232 steel/aluminum tariffs, the Section 232 automobile and automobile parts investigation, and the Section 301 China-related tariffs.
Happy new year!
With growing congressional and business concerns over the backlog of Section 232 product exclusion requests and the lack of transparency in the review and decision-making processes of the Department of Commerce (Commerce), U.S. Senators Pat Toomey, Doug Jones and Thomas Carper submitted a letter November 26, 2018, to the Government Accountability Office (GAO) requesting a formal review by this government agency as to how Commerce has been granting these tariff exclusions. Among the issues the senators asked to be evaluated are:
- What criteria are used to make a determination to approve or deny a request, and how does Commerce adjudicate rebuttals?
- What steps is Commerce undertaking to improve the timely processing of exclusion requests?
- How does Commerce ensure transparency and adequate communication with parties who have filed requests?
- How has Commerce trained staff to properly evaluate petitions?
On December 12, the GAO responded to this request, confirming that it will conduct such an analysis and study. While this announcement will no doubt please trade practitioners and U.S. businesses that have been frustrated by the Section 232 product exclusion request process, the results of any such analysis – much like decisions resulting from the Section 232 product exclusion request process itself – are months away. The GAO informed the senators that staff will be available to initiate a review in approximately three months. The final findings of any GAO report will most likely not be presented to the Senate until mid-2019, at the earliest.
The U.S. International Trade Commission (USITC) determined December 7, 2018, by a 5-0 unanimous vote of its commissioners that U.S. industry is materially injured by reason of imports of common alloy aluminum sheet from China. This finding follows the determination of the U.S. Department of Commerce’s International Trade Administration (ITA) in early November that such imports are subsidized and sold in the United States at less than fair value. (See Trump and Trade Update of November 9, 2018.) These are the first trade remedy cases that the Trump administration has “self-initiated,” starting a process that usually begins with a petition from the domestic industry. It’s been more than 25 years since the last self-initiated trade remedy case.
As a result of the USITC’s final affirmative injury determination, the ITA will now issue antidumping and countervailing duty orders on imports of common alloy aluminum sheet from China. The USITC, however, made a negative finding concerning critical circumstances as to imports of this product from China. As a result, imports of common alloy aluminum sheet from China will not be subject to retroactive antidumping or countervailing duties.
The USITC’s public report, Common Alloy Aluminum Sheet from China (Inv. Nos. 701-TA-591 and 731-TA-1399 (Final), USITC Publication 4861, December 2018), will contain the views of the USITC and information developed during the investigations. The report will be available by January 11, 2019; when available, it may be accessed on the USITC’s Official Publication Log.
The Department of Commerce’s Bureau of Industry and Security (BIS) has amended the exclusion request process for the tariffs on certain steel and aluminum products implemented under Section 232 of the Trade Expansion Act of 1962. On March 8, 2018, President Trump exercised his authority under Section 232 and imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports (with certain countries receiving exemptions). U.S. Customs and Border Protection (CBP) began collecting the tariffs on March 23, 2018.
BIS has acknowledged that the number of filings has far surpassed expectations – as of August 20, BIS had received more than 38,000 exclusion requests and more than 17,000 objections – amid growing concerns over the importance of a transparent, fair and efficient product exclusion and objection process. The amendments seek to address these concerns and will create a process for rebutting objections filed to exclusion requests. They also attempt to clarify the criteria BIS considers during the review process to grant or deny an exclusion request. Continue Reading Department of Commerce Amends Section 232 Exclusion Process for Steel and Aluminum Products
Late Wednesday night, Secretary of Commerce Wilbur Ross announced targeted relief from the voluntary quotas the United States successfully negotiated with South Korea, Argentina and Brazil on steel, and with Argentina on aluminum. U.S. companies may now apply for product exclusions seeking steel or aluminum from these countries based on insufficient quantity or quality available from U.S. steel or aluminum producers. In such cases, the Department of Commerce has stated that an exclusion from the negotiated quota limits “may be granted and no tariff would be owed.” Previously, the product exclusion request processes were limited to steel and aluminum from countries that were fully subject to the Section 232 steel and aluminum tariffs of 25 percent and 10 percent, respectively, and did not allow for the submission of product exclusion requests for steel and aluminum products subject to the Section 232 tariffs from countries with negotiated quotas, which allowed imported products within the quotas to be exempt from those tariffs. Continue Reading President Trump Amends Section 232 Steel and Aluminum Product Exclusion Request Processes for Imports from Countries under Negotiated Quotas
On August 10, 2018, President Trump announced on Twitter that the United States would double Section 232 steel and aluminum tariffs on Turkey, referencing the drop of the Turkish lira as his reason for hiking the tariffs. Later that day, the White House issued a presidential proclamation directing that a 50 percent ad valorem tariff be imposed on steel articles imported from Turkey. U.S. Secretary of Commerce Wilbur Ross released a statement the same day saying that “since the imposition of the Section 232 tariff in March, exports to the United States have declined and domestic capacity utilization has increased, but not to levels sufficient to remove the threat to national security. Doubling the tariff on imports of steel from Turkey will further reduce these imports that the Department found threaten to impair national security as defined in Section 232.” The increased tariff rate went into effect on August 13, 2018.
In response, Turkish President Recep Tayyip Erdoğan increased tariffs on several U.S.-origin products with a presidential decree published in the Turkish government’s Official Gazette on August 15, 2018. Turkey increased tariffs on products such as rice, tobacco, vehicles, alcohol, coal and cosmetics. With Erdoğan’s decree, tariffs on passenger cars, alcoholic drinks and leaf tobacco have been doubled, resulting in tariffs of 120 percent, 140 percent and 60 percent respectively. Other U.S. products now facing tariffs include nuts, cosmetics, plastics and paper. Turkey’s Vice President Fuat Oktay stated that the tariffs were “within the framework of the principle of reciprocity in retaliation for the conscious economic attacks by the United States.” These Turkish tariffs went into effect on August 15, 2018.
In March 2018, President Trump announced that under Section 232 of the Trade Expansion Act of 1962, the United States would increase tariffs on imports of certain steel products by 25 percent and imports on certain aluminum products by 10 percent on countries worldwide, including imports from the members of the European Union (EU) and Turkey. Although the EU was initially exempted from the imposition of tariffs, these tariffs came into place pursuant to two Presidential Proclamations issued on May 31, 2018. In response, the EU and Turkey announced their intent to impose retaliatory tariff measures. Continue Reading European Union and Turkey Announce Tariffs on Certain U.S. Products
President Donald Trump signed yesterday two Presidential Proclamations adjusting imports of aluminum and steel into the United States. In doing so, he stated that measures are now in place to address the impairment to the national security threatened by imports of steel and aluminum from Argentina, Brazil and Australia. South Korea previously reached an agreement with the United States on April 30 to limit its imports of steel. President Trump added, however, that “similar measures are not in place with respect to steel or aluminum imports from Mexico, Canada or the European Union” and that insufficient progress had been made in ongoing negotiations with these countries. He declared that, as of June 1, 2018, the Section 232 tariffs for steel of 25 percent and for aluminum of 10 percent will no longer be suspended for such imports from these countries. The White House indicated that it will continue discussions with them and remains open to discussions with other countries that may lead to permanent country-based exemptions. Continue Reading Trump Administration Implements Section 232 Tariffs on Steel and Aluminum Imports from Canada, Mexico and the European Union
With the deadline approaching for full implementation of the Section 232 tariffs on certain steel and aluminum imports, President Trump on April 30, 2018 relented to increasing pressure and extended the tariff exemptions for key U.S. allies until June 1, 2018. In making the announcement, the Trump administration announced that it had previously reached a final agreement with South Korea on steel imports and has also reached agreements in principle with Argentina, Australia and Brazil on both steel and aluminum imports. In addition, the president indicated that he was extending the country-based exemptions for Canada, Mexico and the European Union for a final 30 days. In all these negotiations, the administration has been focused “on quotas that will restrain imports, prevent transshipment, and protect the national security.” Until June 1, 2018, the United States will maintain current tariff levels for Canada, Mexico and the EU.
The president previously noted in Presidential Proclamation 9711 that the tariffs, initially implemented on March 23, 2018 for most U.S. trading partners, would be extended until May 1, 2018 in recognition of the important security relationship between the United States and these countries while the parties sought alternative means to address the threatened impairment to U.S. national security by imports of steel and aluminum articles from those countries. Unless exempted, the tariffs under these Section 232 trade actions are 25 percent on certain imported steel and 10 percent on certain imported aluminum. Separate from the White House June 1 extension announcement, Commerce Secretary Wilbur Ross stated that these countries will have to agree to reduce the volume of their exports to the United States, indicating that “If people don’t have the tariffs, and they don’t have the quota, that would defeat the whole purpose” of the Section 232 investigations and recommended actions.
It is already known that South Korea has agreed to cap its annual steel exports to the United States at approximately 70 percent of the country’s annual shipments from 2015 to 2017; the aluminum tariff remains in place for South Korea. While yesterday’s announcement indicated that agreements had been reached with Australia, Argentina and Brazil, no details were made available. Negotiations will continue with the remaining countries subject to the extensions (Canada, Mexico and the EU), significant U.S. steel and aluminum trade partners, for the next 30 days.
For additional details on these extensions, see Presidential Proclamation Adjusting Imports of Steel into the United States and Presidential Proclamation Adjusting Imports of Aluminum into the United States.