SEMA eNews Vol. 21, No. 8, February 22, 2018

U.S. Dept. of Commerce Recommends Tariffs on Imported Steel and Aluminum

By SEMA Washington, D.C., Staff

The U.S. Department of Commerce recommended that President Trump impose tariffs on imports of steel and aluminum, citing a potential dependence on foreign sources for these critical materials poses a threat to national security. The Commerce Department cited excess global production, which has reduced prices and resulted in the closure of many U.S. factories. According to the Commerce Department, U.S. steel mills are operating at 73% of capacity and more than half of U.S. aluminum capacity now lies dormant. Six aluminum smelters have closed in recent years, and imports now account for 90% of U.S. aluminum consumption, up from 66% in 2012. The Commerce Department recommended several options with the goal of boosting U.S. steel and aluminum production to 80% of current domestic capacity.

For steel:

  • Global Tariff: A tariff of 24% or more on all covered steel imports from all countries.
  • Targeted Tariff and Global Quota: A tariff of 53% or higher on covered steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Korea, Russia, South Africa, Thailand, Turkey and Vietnam). All other countries would have quota limits based on their 2017 exports to the United States.
  • Global Quota: A global quota that would limit imports from all countries to 63% of their total 2017 exports into the United States (on a country-by-country basis).

For aluminum:

  • Global Tariff: A tariff of at least 7.7% on all covered aluminum imports from all countries.
  • Targeted Tariff and Global Quota: A tariff of 23.5% or more on all covered aluminum imports from China, Russia, Hong Kong, Venezuela and Vietnam. All other countries would have quota limits based on their 2017 exports to the United States.
  • Global Quota: A global quota that would limit imports from all countries to 86.7% of their total 2017 exports to the United States (on a country-by-country basis).

President Trump has until April 11 to act on the steel import recommendations and April 19 for aluminum sanctions. If imposed, the tariffs could be challenged by other countries within the World Trade Organization and potentially lead to retaliation moves by U.S. trading partners.

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