U.S. Trade Representative Katherine Tai's conversations with her counterparts from Italy and the Netherlands addressed global overcapacity in steel, according to summaries of the video calls released April 16. The administration has suggested that Section 232 tariffs on aluminum and steel cannot be removed until overcapacity has been addressed, even when the countries subject to those tariffs are not dumping steel or aluminum in their exports to the U.S.
Section 232 Tariffs
The United States currently maintains a 25% tariff on steel imports and 10% on tariff on aluminum imports under Section 232 of the Trade Expansion Act of 1962. In 2018, the Trump administration imposed Section 232 Tariffs on steel and aluminum imports into the United States, citing national security concerns. The U.S. agreed to lift tariffs on Canada and Mexico after the signing of the United States-Mexico-Canada Agreement (USMCA), and reached deals with the European Union, Japan and other countries to replace the tariffs with quotas for steel and aluminum imports into the U.S.
European Union Trade Commissioner Valdis Dombrovskis, in a Der Spiegel interview published April 10, said that the EU has offered to lift its retaliatory tariffs in response to 25% tariffs on EU steel and 10% tariffs on EU aluminum, while they try to resolve the overcapacity problem. “We have proposed suspending all mutual tariffs for six months in order to reach a negotiated solution,” Dombrovskis said, according to the EU press office in Washington. “This would create a necessary breathing space for industries and workers on both sides of the Atlantic,” he said.
Christopher Kane, partner at Simon Gluck, expressed optimism over a recent U.S. Court of International Trade ruling striking down an extension of President Donald Trump's Section 232 tariffs to aluminum and steel derivatives (see 2104050049). He believes the ruling spells good news for the massive litigation involving more than 3,700 companies challenging the expansion of the Section 301 tariffs on goods from China. Although based on a different law, Kane believes CIT's April 5 ruling demonstrates the court's willingness to hold the president to account over laws and regulations. In the case of the derivatives, the tariff expansion was eliminated because it was imposed after a 105-day period during which the president can impose Section 232 tariffs after receiving a report on the need for the duties from the Commerce Department.
Commerce Secretary Gina Raimondo, speaking at a White House press conference April 7, argued that America's infrastructure needs are broader than roads, bridges and ports, and touted the president's proposal to invest $50 billion in semiconductor manufacturing and research, as well as spending to carry broadband to rural areas. She also argued that spending on elder care will prevent people from having to drop out of the workforce to care for relatives.
Although many American liquor exports received a reprieve with the lifting of Boeing tariffs in Europe, bourbon and other American whiskeys continue to face a 25% punitive tariff in the European Union and the United Kingdom because of Section 232 tariffs on those countries' steel and aluminum exports. At the time the tariffs were imposed, Sen. Mitch McConnell, R-Ky., was majority leader, so the product choice was considered to create additional pressure on the administration to reverse the action.
President Donald Trump's addition of Section 232 tariffs on finished products of steel and aluminum was “invalid,” Court of International Trade Judges Timothy Stanceu and Jennifer Choe-Groves said in an April 5 ruling. The ruling is the result of a challenge from PrimeSource Building Products, which said the presidential proclamation that imposed the tariffs on steel and aluminum “derivatives” was improper because it was issued after the statutory deadline.
The Court of International Trade found that President Donald Trump violated procedural time limits when expanding Section 232 tariffs to steel and aluminum “derivatives,” in an April 5 decision granting refunds to steel nail importer PrimeSource Building Products. Judges Timothy Stanceu and Jennifer Choe-Groves, as part of a three-judge panel, struck down the tariff expansion, ruling that the president exceeded his authority to impose tariffs when he elected to extend them to derivative products. Judge M. Miller Baker, the remaining judge on the panel, dissented from the opinion.
U.S. Trade Representative Katherine Tai held a video call with Turkey's trade minister, Ruhsar Pekcan. Pekcan apparently brought up Section 232 tariffs on Turkish steel, and according to the U.S. readout, Tai and Pekcan talked about ways to coordinate on “the global overcapacity of steel and aluminum.” Tai also discussed with Pekcan how to coordinate on digital services taxation, and opportunities to increase market access for U.S goods in Turkey and vice versa.
The following lawsuits were filed at the Court of International Trade during the week of March 22-28:
On the same day that 37 trade associations worked to draw attention to a renewed push to eliminate Section 232 tariffs, a left of center think tank published a paper disagreeing with the arguments that the Tariff Reform Coalition is making, that steel and aluminum sanctions cost more jobs in manufacturing than they saved at primary steel producers.