With the international trade community’s focus on China (tariffs) and Mexico/Canada (NAFTA negotiations), it would be easy to forget another significant trade matter that the Trump administration has been seeking to finalize. According to reports, the revised Korea-U.S. Free Trade Agreement (KORUS) will be signed today after President Trump and South Korean President Moon Jae-in meet in New York City, where both are attending the start of the United Nations’ General Assembly plenary session. Continue Reading Revised Korea-U.S. Free Trade Agreement to Be Signed
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.
On April 12, 2018, the House of Representatives’ Committee on Ways and Means held a hearing to explore the effects on the U.S. economy and jobs of the tariff increases related to Section 232 and Section 301 investigations. Before the hearing, Chairman Kevin Brady stated, “In enforcing our trade laws, we should always take a targeted approach to address unfair practices while avoiding harm to U.S. workers and job creators. Our private sector witnesses will discuss the impact of recently announced U.S. tariff increases on their businesses, including product and country coverage of the tariffs, the process to comment on and apply for exclusions from the tariffs, and the effects of possible retaliation on U.S. exporters.” In his opening comments, Brady highlighted China’s questionable trade policies and practices, but also asked, “How do you avoid punishing Americans for China’s misbehavior?” Continue Reading House Committee Holds Hearing on Effects of Tariff Increases on U.S. Economy and Jobs
The Department of Commerce has released information setting forth the process for how parties in the United States may submit requests for product-based exclusions from tariffs implemented by President Trump under Section 232 of the Trade Expansion Act of 1962 to protect national security from threats resulting from imports of aluminum and steel, as previously detailed in two presidential proclamations. The March 8, 2018 proclamations authorize the secretary of Commerce to grant exclusions from the tariffs upon the request of affected parties if the steel or aluminum articles are 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.
In a Federal Register notice to be published on Monday, March 19, 2018, Commerce is issuing an “interim” final rule seeking comments on the manner in which it intends to implement the requirements for submissions requesting product-based exclusions from the tariff remedies. While interim in nature, the notice indicates that sufficient conditions have been met to immediately implement the rule and, in turn, the requirements for seeking a product-based exclusion. Because, the notice states, normal clearance procedures would prevent or hinder the collection of information for national security purposes, and a delay in an effective date while seeking public comment could harm national security, the requirements for requesting product-based exclusions from the Section 232 aluminum and steel tariffs will be effective March 19.
The notice provides specific guidance as to how individuals or companies using steel or aluminum articles in business activities (e.g., construction, manufacturing or supplying steel/aluminum to users) in the United States may submit product-based exclusion requests. The notice is clear that these exclusions will be limited to entities located in the United States, since allowing those not engaged in business activities in the United States to seek such exclusions “could undermine the adjustment of imports that the President determined was necessary to address the threat to national security posed by the current import[s]” of these articles. Further, any approved exclusions will be made on a product basis and will be limited to the individual or organization that submitted the request, unless Commerce approves a broader application of that particular product’s exclusion. The notice also makes clear that the country-based exemptions to be handled through negotiations by the U.S. Trade Representative are separate and apart from the product-specific exclusion process.
Commerce is requiring that submissions requesting exclusion be filed using specific forms – Steel Exclusion Forms and Aluminum Exclusion Forms – that will be posted shortly on Commerce’s website. Forms for objecting to exclusion requests will also be posted at these web pages. Commerce notes that information submitted in exclusion requests and objections to submitted exclusion requests will be subject to public review and made available for public inspection and copying. Parties that have proprietary or business confidential information they believe to be relevant for consideration will need to indicate so on the forms. A party making an exclusion request must specify its business activities in the United States that provides it authorization and sufficient reason to request an exclusion. Exclusion requests (i.e., forms) that are incomplete will be denied. There is no time limit for submitting a product-based exclusion request.
The review process for considering an exclusion request (and any objections) will normally not exceed 90 days. Approved exclusions will be effective five business days after publication of the responses in the appropriate dockets for aluminum (Docket No. BIS-2018-0002) and steel (Docket No. BIS-2018-0006) on www.regulations.gov. Starting on that date, the requesting party will be able to rely upon the approved exclusion request in calculating the duties owed on the product imported in accordance with the terms listed in the approved exclusion request. Exclusions will generally be approved for one year.
The European Union (EU) has published a list of U.S. products it might target in retaliation if President Trump moves forward with tariffs on imports of steel and aluminum from the Section 232 investigations. The list is divided into two categories:
- Part A is a list of U.S. products that face immediate retaliation if the United States implements its steel tariffs. These products could face proportional EU tariffs of up to 25 percent. The EU also plans to file a complaint over the U.S. tariffs with the World Trade Organization (WTO).
- Part B is a list of U.S. products that would also be included if the WTO rules that the U.S. aluminum and steel tariffs are illegal.
The EU has indicated in a notice seeking comments that the publication of this list is a procedural step in preparing a response to any potential U.S. tariffs. The European Commission, which coordinates trade policy for the 28 EU members, has invited comments from private stakeholders affected by the forthcoming U.S. tariffs of 25 percent on steel imports and 10 percent on aluminum imports. The commission is considering, as a first step, suspending tariff concessions under Article 8 of the WTO Agreement on Safeguards and, as a second step, subsequently and at the appropriate level, imposing increased customs duties on certain products from the United States.
The Thompson Hine Trump and Trade team recommends that U.S. companies that export to Europe review this proposed list to determine any potential impact on business activities. For additional background on the Section 232 investigations, the Department of Commerce’s reports and the subsequent presidential proclamations, please see Thompson Hine’s International Trade Update of March 13, 2018.