U.S. and UK Reach Agreement to End Steel Dispute, Launch New Talks on Future of Atlantic Trade

Trade Update • MARCH 29, 2022

On March 22, the United States and the United Kingdom announced they had reached agreement on allowing “sustainable volumes” of UK steel and aluminum products to enter the U.S. market without the application of Section 232 tariffs.

The deal was is the latest in a series of efforts by the Biden administration to settle ongoing trade disputes with U.S. allies.  Like those recently struck with the EU and Japan, the new agreement with the U.K., which takes effect June 1, 2022, establishes a tariff-rate quota that will allow a certain “historically-based” volume of British steel and aluminum to enter the U.S. without duties. Any shipments in excess of that level would still be subject to the Sec. 232 duties.

Both countries will monitor steel and aluminum trade between the countries and cooperate on non-market excess capacity “to address issues relating to unfairly traded imports and surges in imports of products, and to ensure domestic industries operate in market-oriented conditions.”

Under the framework of the agreement, the United States will replace the existing Section 232 25% tariff on UK steel products with a tariff-rate quota. For steel,  the aggregate annual import volume under the TRQ is set at 0.5 million metric tons for 54 product categories and allocated in line with the 2018-2019 period.

To be eligible for Section 232 duty-free treatment under the quota, steel imports must be “melted and poured” in the UK according to current U.S. requirements.

The agreement also requires that any UK steel company owned by a Chinese entity must undertake an audit of its financial records to assess influence from the Chinese government. The results of such audits must be shared with the United States.

Aluminum TRQ

For aluminum, historically-based volumes of UK aluminum products will enter the U.S. market without the application of Sec. 232 tariffs. In this regard, the aggregate annual import volume under the TRQ is set at 0.9 thousand metric tons for unwrought aluminum under two product categories and at 11.4 TMT for semi-finished (wrought) aluminum under 12 product categories. The import volumes will be allocated in line with the 2018-19 period, with the exception of foil (7607), where 2021 annualized data will be utilized.

Importers must provide a certificate of analysis for each aluminum product entered into the U.S., as required by current U.S. law. As with steel, the U.S. will maintain its product exclusion process.

U.S./UK Dialogues on the Future of Atlantic Trade

In addition, U.S. Trade Representative Katherine Tai and UK Secretary of State for International Trade Anne-Marie Trevelyan launched  a new series of bilateral dialogues to explore how the two countries will collaborate to advance mutual international trade priorities rooted in shared values, while promoting innovation and inclusive economic growth for workers and businesses on both sides of the Atlantic.

According to a statement, the two countries “will use these Dialogues and their on-going engagement with stakeholders to identify further steps to move forward our important U.S.-UK bilateral trade relationship and address our shared challenges and opportunities over the coming months.”