United States, Japan Reach Deal To Curb Section 232 Steel Tariffs
The U.S. and Japanese governments have reached a deal that will reduce U.S. Section 232 tariffs on imports of Japanese steel products. Aluminum imports from Japan will not be impacted by the agreement and still will be subject to 10 percent penalties.
Regarding steel products, effective April 1, 2022, the United States will replace its existing Section 232 penalty with a tariff-rate quota (TRQ) system that will allow 1.25 million metric tons of Japan’s steel products to enter the United States without the application of the 25 percent tariffs that were put into place under the Trump administration. Imports above that level will be subject to the original 25 percent penalty.
To be eligible for duty-free treatment under the TRQ, steel imports must be “melted and poured” in Japan according to U.S. requirements and rules for implementing the agreement. Importers must provide relevant documentation substantiating compliance with the U.S. requirements. Failure to comply could result in remedies and/or penalties.
In exchange for reducing the tariffs, Japan agreed to implement domestic policies, such as antidumping, countervailing duty, and safeguard measures, within six months.
Both countries agreed to share import data with respect to steel and aluminum, including from third-country markets, and will consult upon request regarding surges to ensure that each country is taking steps to address non-market excess capacity. Japan and the United States also both agreed to address excess capacity by expanding coordination on trade remedies and customs matters and by sharing public information and best practices on topics ranging from the detection of fraud/evasion to circumvention of duties and self-initiation.
Read the agreement and find more information here.
The U.S. imported about 1.7 million metric tons of steel from Japan in 2017, the most recent year not impacted by the Section 232 tariffs. According to data from the U.S. Department of Commerce, imports fell to 1.1 million tons by 2019.
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.