U.S. Officials Working With Key Allies To Address Section 232 Tariffs
The U.S. government is stepping up deliberations with allies on how to approach the Trump administration’s Section 232 tariffs on steel and aluminum products. As a reminder, these tariffs call for a 25 percent penalty on steel imports into the United States and a 10 percent penalty on aluminum imports.
Imports from some countries, including Canada and Mexico, are exempt from the tariffs and the Biden administration is now in talks with additional trading partners about potential exemptions.
On January 18, for example, U.S. Commerce Secretary Gina Raimondo, U.S. Trade Representative Katherine Tai, and United Kingdom Trade Minister Anne-Marie Tevelyan issued a statement pledging to work toward a swift deal that ensures the viability of the steel and aluminum industries in both countries and also “strengthens their democratic alliance.” According to S&P Global Platts, the trade representatives also pledged to seek a prompt resolution to address global excess metal production capacity and the “deployment of effective solutions, including appropriate trade measures, to preserve our critical industries.”
As readers are aware, the Biden administration already has reached a deal with the European Union (EU) to drop the Section 232 metals tariffs and replace them with a new import quota system. In return, the EU agreed to eliminated retaliatory tariffs on U.S. products, including whiskey.
Last week, the United States and the EU took another step, formally downgrading their World Trade Organization dispute over the tariffs. Specifically, each government agreed to pause the WTO panels that had been ready to hear arguments in the case and instead use a more informal arbitration mechanism. Under arbitration, parties may set their own rules and procedures, and define the issues to be considered in the dispute, but also must agree that the arbitrators’ decision will be final.
MSCI is reporting this news for members’ information only. As a reminder, MSCI consistently has argued that global overcapacity and other unfair trading practices, particularly by China, have harmed the U.S. steel and aluminum markets.
To address this circumvention, in 2017 MSCI advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements, including the United States Mexico Canada Agreement (USMCA). MSCI also asked that Canada and Mexico be excluded from any trade penalties.
Click here to review all of MSCI’s advocacy on Section 232 tariffs.