The Department of Defense agrees with a Section 232 investigation that concludes that systematic unfair trade practices that erode the industrial base pose a risk to national security. However, Defense Secretary James Mattis' position is that any tariffs or quotas aimed at shoring up the domestic steel and aluminum industries may have "negative impact on our key allies." Mattis, in an undated memo released by the Commerce Department on Feb. 22, wrote that there is no immediate problem with sourcing steel and aluminum for military uses, since military consumption is just 3 percent of U.S. production. The Commerce Department's report, which became public last week (see 1802160020), noted that as well.
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.
South Korea and China are reportedly signaling plans to challenge potential new tariffs or quotas on foreign steel and aluminum. Kang Sung-cheon, deputy minister of trade, told the local press that South Korea should not be on the list of 12 countries targeted for high U.S. tariffs, just because it imports steel from China. "Steel products imported from China are mostly used to satisfy domestic demand in the construction and shipbuilding sectors, while Korean steel shipped to the U.S. is (made up of) high-value added products for the automobile and energy industries," Kang said.
International Trade Today is providing readers with some of the top stories for Feb. 12-16 in case they were missed.
The nominee for the Commerce Department's undersecretary for international trade may be able to get a vote on his confirmation before his wait reaches the 10-month mark. Gil Kaplan was nominated May 25, and the Senate Finance Committee unanimously approved him Sept. 7, but a hold from Minority Leader Chuck Schumer, D-N.Y., prevented his name from going to a full Senate floor vote (see 1710270015).
Worldwide tariffs on steel and aluminum or worldwide quotas on imports of those metals are two of the Commerce Department’s three recommendations on how to respond to plant closures and job losses in the domestic steel and aluminum industries. A flood of steel and aluminum, dumped at prices that undermine U.S. producers, is threatening the industrial base, and therefore national security, Commerce Secretary Wilbur Ross told the White House in January. On Feb. 16, he shared the details of those reports with reporters on a conference call, and posted redacted versions of both reports on the department’s website.
President Donald Trump told 15 congressional Republicans and four Democrats visiting the White House Feb. 13 that he's considering quotas or tariffs to protect domestic steel and aluminum. Producers have been decimated by dumping from China and other countries, he said. He said he'd discussed "in great detail" on the campaign trail how U.S. steel and aluminum industries have been taken advantage of by other countries.
Commerce Secretary Wilbur Ross on Jan. 19 formally submitted to President Donald Trump the results of the department's Section 232 investigation on the national security effects of imports of wrought and unwrought aluminum, Commerce said in a Jan. 22 news release. Submission of the report starts a 90-day clock for Trump to decide whether to impose any import restrictions under the investigation, Commerce said. The recommendations, along with those submitted Jan. 11 in an ongoing Section 232 investigation on steel (see 1801120023), include a “wide range of options” from measures “specifically targeting ‘bad actors’” in the steel and aluminum industries to broader tariffs on steel and aluminum, according to a report from CNBC.
The National Taxpayers Union (NTU) in a Dec. 12 letter requested a halt to the Commerce Department-led Section 232 investigations into the national security impacts of steel and aluminum imports, saying any trade actions activated pursuant to the probe would be a “misuse of policy” intended for genuine emergencies, hurt U.S. alliances and break “longstanding precedent.” “Providing the military with dependable metal is important,” the letter says. “However, the amount of steel and aluminum used for defense is a relatively small portion of the total demand, given that the defense industry consumes roughly 1 percent of all aluminum and 3 percent of steel.” NTU also called China the “scapegoat” of U.S. economic woes, adding that the nation “only” accounts for 4 percent of imported steel and 6 percent of imported aluminum. Imposing tariffs would increase costs for manufacturers who rely on lower-priced steel and aluminum imports, and in turn, raise consumer costs for such goods as automobiles, housing, soda cans and dishwashers, the NTU said. Commerce didn't comment.
Senate Minority Leader Chuck Schumer, D-N.Y., will block the nominations of Gilbert Kaplan to be under secretary of commerce for international trade and Nazakhtar Nikakhtar to be an assistant secretary of commerce for industry and analysis at the International Trade Administration until the Commerce Department gives more information on the progress of metal import reviews, Schumer said in a statement. The Trump administration launched Section 232 investigations in April into whether steel and aluminum imports are a threat to national security, and affirmative findings could result in tariffs or quotas on those products. The investigations, led by the Commerce Department, remain under interagency review after Commerce indefinitely postponed its self-imposed deadline of June 30 for concluding the steel investigation (see 1705240034).
Defense officials in the Trump administration are treading cautiously in determining whether to take any tariff or quota action against other countries, Under Secretary of Defense for Acquisition, Technology, and Logistics Ellen Lord said Oct. 4 during the Bureau of Industry and Security annual export control policy conference. The administration launched Section 232 investigations in April into whether steel and aluminum imports are a threat to national security, and affirmative findings could result in tariffs or quotas on those products. The investigations, led by the Commerce Department, remain under interagency review after Commerce indefinitely postponed its self-imposed deadline of June 30 for concluding the steel investigation (see 1705240034).