Trade Compliance

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U.S. Hits Canada and Other Allies With Punitive Steel and Aluminum Tariffs

Posted May 31, 2018

The U.S. Commerce Department on Thursday announced that it would not grant any further exemptions to Canada, Mexico and the European Union from the Trump administration’s punitive tariffs on steel and aluminum imports, thereby making them subject to additional duties of 25% and 10% respectively as of June 1, 2018.

Originally imposed on March 8, 2018 following determinations that steel and aluminum imports “in the present quantities and circumstances” are weakening the America’s economy and “threaten to impair” U.S. national security, Commerce Secretary Wilbur Ross said at the time that he hoped the proposed tariffs and other import restrictions would help boost domestic production, while also encouraging other countries to adopt similar measures in an effort to stem a global overcapacity problem in both industries.

A one-month suspension of the tariffs was initially granted to Canada, Mexico, the EU, and several other countries, “pending discussions of satisfactory long-term alternative means to address the threatened impairment to U.S. national security,” according to the White House. The temporary reprieve was later extended until May 31, 2018.

During this suspension period, the Trump administration made no secret that it was employing the threatened tariffs for more than their stated purpose, even though this might be viewed as undermining their legitimacy in any future legal challenges. At various times over the past few months, President Trump and members of his cabinet indicated they were using the tariffs as leverage to pressure Canada and Mexico into accepting hardline U.S. demands in negotiations to modernize the North American Free Trade Agreement and also to win concessions from the EU on a range of contentious trade issues.

Speaking to reporters this morning from Paris, where he was attending a meeting of the Organization for Economic Co-operation and Development, Ross stated that insufficient progress had been made in both the NAFTA talks and its trade discussions with the EU to warrant extensions of the temporary suspensions or permanent exclusions for those countries.

The NAFTA talks were “taking longer than we had hoped,” Ross said, adding that “there is no longer a very precise date when they may be concluded and therefore they were added into the list of those who will bear tariffs.”

“Similarly, we had had discussions with the European Commission and while those made some progress, they also did not get to the point where it was warranted either to give a continued temporary exemption or a permanent exemption,” Ross explained.

Scope of Coverage

With today’s presidential proclamations, effective June 1, 2018, the following goods from Canada and other affected countries will be subject to additional duties pursuant to Section 232 of the Trade Expansion Act of 1962. These tariffs are in addition to any existing duties, fees or other applicable charges.

Steel and Iron products subject to additional 25% duty under heading 9903.80.01 including:

  • Flat-rolled products provided for in headings 7208, 7209, 7210, 7211, 7212, 7225 or 7226;
  • Bars and rods provided for in headings 7213, 7214, 7215, 7227, or 7228, angles, shapes and sections of 7216 (except subheadings 7216.61.00, 7216.69.00 or 7216.91.00); wire provided for in headings 7217 or 7229; sheet piling provided for in subheading 7301.10.00; rails provided for in subheading 7302.10; fish-plates and sole plates provided for in subheading 7302.40.00; and other products of iron or steel provided for in subheading 7302.90.00;
  • Tubes, pipes and hollow profiles provided for in heading 7304, or 7306; tubes and pipes provided for in heading 7305;
  • Ingots, other primary forms and semi-finished products provided for in heading 7206, 7207 or 7224; and
  • Products of stainless steel provided for in heading 7218, 7219, 7220, 7221, 7222 or 7223.

Aluminum products subject to 10% additional duty under heading 9903.85.01 including:

  • Unwrought aluminum provided for in heading 7601;
  • Bars, rods and profiles provided for in heading 7604; wire provided for in heading 7605;
  • Plates, sheets and strip provided for in 7606; foil provided for in heading 7607;
  • Tubes, pipes and tube or pipe fittings provided for in heading 7608 and 7609; and
  • Castings and forgings of aluminum provided for in subheading 7616.99.51.

It should be noted that NAFTA eligibility will not make the product exempt and also that Section 232 duties may not be recovered through duty drawback.