USTR Says Section 232 Modernization Needed While U.S., EU Reportedly Have Reached Deal On Metals Tariffs

The debate over the United States’ steel and aluminum tariffs continued to dominate trade policy news last week.

First, U.S. Trade Representative Katherine Tai asked Congress to modernize the law that former President Donald Trump has used to impose the penalties. As Reuters reported, in testimony before the Senate Finance Committee, Tai said that Section 232 of the Trade Act of 1962 was not well-suited to protect U.S. steelmakers from foreign competition and that fact has harmed the U.S. economy and heightened tensions with trading partners.

While Tai did not offer specific reforms for lawmakers should consider, she said, “[W]e need 2021 tools for addressing the 2021 challenges we have, rather than relying on 1962 tools and retrofitting them for the challenges we have now.” She also said trade policy should “help level the playing field for new workers.”

Additionally, Bloomberg reported the Biden administration has reached an agreement in a dispute with the European Union (EU) over the metals tariffs. A formal announcement in the matter could come this week and likely will include pledges from the EU to refrain from increasing retaliatory tariffs and in exchange for an agreement by the United States to engage in a dialog on steel overcapacity.

In related news: The Wall Street Journal reported that U.S. tariffs have led to a sharp decline in Chinese imports. Purchases of telecommunications gear, furniture, apparel, and other goods shifting to other countries have declined, for example. Nearly two-thirds of all imports from China, or approximately $370 billion in annual goods, were covered by tariffs imposed by the United States in 2018 and 2019. Read more here.