Steel, aluminum imports face wide or narrow remedies

Magazine Archive Uncategorized

   Separate reports on the national security impacts of steel and aluminum imports sent by the Commerce Department to President Trump in January present options ranging from “a big tariff on everything from everywhere” to “very selective tariffs from a very specific group of countries,” Commerce Secretary Wilbur Ross told lawmakers during a Tuesday trade meeting hosted by President Trump.
   Ross also raised the prospect that the recently completed “Section 232” investigations could lead to quotas on steel and aluminum imported from countries not subject to tariffs.
   “There are one [or] two countries that figure quite prominently in all of the lists, and those names will come as no surprise to you,” Ross said, according to a White House transcript of the meeting, which was also attended by U.S. Trade Representative Robert Lighthizer, Vice President Mike Pence, and other administration officials.
   Ross submitted the formal results of the nine-month-long steel and aluminum investigations to Trump on Jan. 18, and Jan. 19, respectively. Trump has until April 18 and April 19, to decide whether to impose any trade remedies on steel and/or aluminum imports, respectively, pursuant to Section 232 of the Trade Expansion Act of 1962.
   Mentions of China and South Korea in the context of U.S. steel and aluminum imports were made several times during the hearing, as senators and senior administration officials aimed part of their attention toward Chinese overcapacity in both sectors and toward South Korea’s prodigious oil country tubular goods (OCTG) exports while it remains a non-oil-producing nation.
   “232 doesn’t have to mean the same tariff on every single country,” Ross said. “It doesn’t have to mean the same tariff on every single product. It can be applied in a much more surgical way.”
   Ross added that Section 232 cases can help expand the ability of the executive branch to combat unfair trade beyond the limitations of conventional antidumping and countervailing duty cases, which by their very nature omit any specific focus on transshipment abuses.
   During the meeting, Sen. Rob Portman, R-Ohio, highlighted the Enforce and Protect Act (EAPA) provisions of the Trade Facilitation and Trade Enforcement Act signed into law in early 2016, as a potential means to stop duty evasion, but said implementation is “just a matter of Customs and Border Protection having so many other responsibilities right now.”
   The EAPA provisions set formal procedures for entities to submit—and for CBP to investigate—allegations of AD and CV duty evasion against U.S. importers, including illicit transshipment actions to avoid financial responsibility to the U.S. government.
   “I think 232 is part of the overall response, but it needs to be targeted,” added Portman, a former U.S. Trade Representative.
   Prime targets would be electrical steel, which has seen a 101 percent overall import increase over the last year, and OCTG, which has seen an 82 percent increase, Portman said.
   A large amount of OCTG imports originate in China, but are transshipped through South Korea, he said.
   Sen. Bob Casey, D-Penn., acknowledged that the administration is in the middle of a 90-day statutory time frame for determining remedies pursuant to Section 232, but urged Trump to “promptly determine” a response, noting that Pennsylvania-based AK Steel, the last remaining U.S. manufacturer of electrical steel, has been “hammered by not having the remedy.”
   But many lawmakers warned of the potential for price spikes with any remedy that’s too broad.
   The first lawmaker to speak during the meeting, Sen. Roy Blunt, R-Mo., said steel and aluminum jobs in his state are “very, very price-sensitive,” and called for the administration to be careful in ordering any remedy, lest it spawn a reciprocal “battle on tariffs.”
   Trump agreed that any remedy should carefully balance considerations of product prices and job expansion, yet erred on the side of job creation.
   “In one case, you’re going to create jobs,” he said. “You may have a higher price or maybe a little bit higher, but you’re going to have jobs. In the other case, you may have a lower price, but you’re not going have jobs; it’s going to be made in China and other places. So those are big decisions. But, to me, jobs are very important.”
   Sen. Mike Lee, R-Utah, also urged caution in applying any Section 232 remedies on steel and/or aluminum imports, noting the abundance of downstream jobs.
   Lee noted that the fact that 16 percent of steel consumed in the U.S. are imports, and don’t face additional duties, “means that those goods can be manufactured and sold more cost effectively. That keeps a whole lot of people…in jobs. And so, even though there may be some job winners from an action like this, I strongly suspect that, as has at times been the case in the past, you would end up with net job losses.”
   Trump responded that he believes in any case of Section 232
duties, “some of the dumpers will eat a lot of the tax themselves because they
do it to keep people working.”
   He added that several foreign-based companies are building
factories in the U.S.
   In the case of Samsung, which in June 2017 announced it
would start building a washing machine manufacturing plant in Newberry, S.C., in
early 2018, Trump attributed the decision to the company’s desire to avoid
tariffs on washers ordered pursuant to Section 201 of the Trade Act of 1974.
   Trump ordered those tariffs in January pursuant to
recommendations by the International Trade Commission and interagency Trade
Policy Staff Committee. But Samsung’s announcement came the month after U.S.-based
Whirlpool petitioned in May for the Section 201 duties.

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