Trump says he’ll impose 25% tariffs on steel, aluminum. News broke on Sunday that President Trump decided to impose 25% duties on steel and aluminum from all countries, sending companies scrambling to assess the potential impacts on their supply chains. History provides observers a useful guide or reference.
In April 2017 the first Trump Administration launched an investigation under Section 232 of the Trade Expansion Act of 1962 to determine the effect of imported steel and aluminum on national security. After substantial efforts and significant public participation, the Department of Commerce reported its findings and recommendation in January 2018. Proclamations from President Trump to establish 25% duties on steel and 10% duties on aluminum followed in March 2018.
The additional duties applied to specific steel products, mostly classified in Chapter 72, HTSUS, as well as particular aluminum products classifiable in Chapter 76, HTSUS. In the months that followed, President Trump’s administration engaged in discussions with multiple countries, including Argentina, Australia, Korea, Brazil, Mexico, Canada and the EU, each of which the President recognized as having “an important security relationship with the United States.” Each of these countries, as well as Japan and the UK were able to either secure exemption from the 232 duties or negotiate tariff rate quota arrangements.
Shortly after the issuance of the report that supported the imposition of the tariffs in 2018, the Department of Commerce announced an exclusion process and developed a set of now well-established procedures for the administration of exclusions from the tariffs. Thousands of individual product exclusions have been allowed and renewed over the years, primarily to support U.S. consumers of steel and aluminum, many of which are significant U.S. manufacturers in their own rights who are unable to source the products and quantities they need domestically.
Meanwhile, steel and aluminum indices prices have risen since 2018 with many citing the tariffs as a driver of higher prices, which was, indeed, one of the objectives of the 2018 tariffs to help support the U.S. production base. As was the case in 2018, steel has always been the subject of many antidumping and countervailing duty cases that impose significant duties on certain imports. Today, according to the International Trade Administration, there are 307 steel-related orders or suspension agreements in place, along with several against aluminum products. In other words, steel and aluminum in the United States are already subject to multiple and substantial duties.
Today’s promised announcement by the President may leave observers with questions.
- What is the timeline for the President’s action? Are the Department of Commerce and U.S. Customs and Border Protection briefed and prepared to implement the planned announcement?
- Will the President initiate a new investigation under Section 232, as he did in 2018, or take new action under the auspices of that same 2018 investigation?
- If he will instead invoke emergency authority to impose tariffs, will it be challenged in the courts given the actions already taken and the mechanisms available to adjust said actions?
- Will these new tariffs have the same scope as and/or be levied on top of existing 232 tariffs, meaning that some steel could be subject to 50% tariffs?
- Will the countries that reached prior agreements with President Trump continue to enjoy the benefit of those agreements? For example, EU, Japan, and UK have tariff rate quota arrangements in place, while Mexico and Canada reportedly reached an agreed upon pause on tariffs against their products just last week.
- If not, will these and other countries have an opportunity to negotiate to toll application of tariffs to steel and aluminum products of their countries?
- Will existing 232 product exclusions be honored to allow exemptions from new tariffs, or, if not, will there be a new exclusion process, since the existing exclusions are generally evidence of a Department of Commerce determination as to the unavailability of particular steel and aluminum products needed by US consumers of steel?
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