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Q: What is happening with President Trump’s initiative to impose increased tariffs on steel and aluminum products?

A: This action has been building since April 2017 when President Trump directed the Department of Commerce to conduct investigations under section 232 of the Trade Expansion Act of 1962 to determine whether imports of steel and aluminum threaten national security. That provision, which has rarely been used, authorizes the President to restrict imports into the U.S. of any article being imported “in such quantities or under such circumstances as to threaten the national security.” 

The Department of Commerce issued separate reports on February 16, 2018, with affirmative findings that imports of both steel and aluminum were threatening national security. Both reports contained specific options for the President to consider in addressing these threats, including increasing tariffs and imposing quotas.

On March 11, 2018, the President issued a proclamation imposing a 25% tariff on imports of certain steel products and one imposing a 10% tariff on imports of certain aluminum products. In recognition of the ongoing discussions with Canada and Mexico to amend NAFTA, the proclamations exempt those two countries from the new tariffs. The President indicated, however, that those exemptions could be removed if a satisfactory agreement is not reached on NAFTA.

The proclamations also leave the door open for additional country exclusions. The proclamations encourage “any country with which we have a security relationship” to propose alternative means to address the U.S. national security threat. If “satisfactory alternative means to address the threat to the national security” can be worked out, the President may remove or modify the tariffs on imports from that country.

 

Which HTS numbers will be affected?

Under the proclamations, the new tariffs will apply to specified steel and aluminum products entering the U.S., or withdrawn from warehouse for consumption, on or after March 23, 2018, and will remain in place indefinitely. Unless modified in annexes that are expected to become available in the coming days, the tariffs will apply to imports from all countries, except Canada and Mexico, for imports classified within specified U.S. Harmonized Tariff Schedule (HTS) provisions.

The applicable HTS provisions for steel are:

  • 7206.10 through 7216.50
  • 7216.99 through 7301.10
  • 7302.10
  • 7302.40 through 7302.90
  • 7304.10 through 7306.00

Aluminum products covered by the proclamation are:

  • Unwrought aluminum (HTS 7601)
  • Aluminum bars, rods, and profiles (HTS 7604)
  • Aluminum wire (HTS 7605)
  • Aluminum plate, sheet, strip, and foil (flat rolled products in HTS 7606 and 7607)
  • Aluminum tubes and pipes and tube and pipe fittings (HTS 7608 and 7609)
  • Aluminum castings and forgings (HTS 7616.99.51.60 and 7616.99.51.70)

Stay tuned for the expected updated annexes providing further detail on the covered HTS numbers. Everyone at Integration Point will be watching closely for any further updates and will be passing them along to our clients as soon as possible.

The proclamations also provide for the possibility of covered products being excluded in the future. The Department of Commerce is directed to establish procedures within 10 days of the March 11 proclamations date to administer exclusion requests. The proclamations delegate authority to the Secretary of Commerce to exclude from the tariffs those goods “determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality.” The proclamations also authorize the Secretary to provide such relief “based upon specific national security considerations.” Again, importers are urged to watch closely in the next few days for the release of the applicable procedures to seek exclusions from the new tariffs.

 

Takeaway

These are indeed challenging times for global traders. On behalf of our clients, we will continue to closely monitor further developments on the implementation of these proclamations and examine the reactions of our trading partners for possible retaliatory actions. It is critically important for all of us to stay on top of this issue because of the broad impact it is likely to have on so many companies.