SEMA eNews Vol. 21, No. 17, April 26, 2018

Are the Tariffs Harming Your Business?

By SEMA Washington, D.C., Staff

The U.S. Government is pursuing two separate actions to challenge potentially harmful international trading practices. 

Steel/Aluminum Tariffs

The U.S. government imposed global tariffs on steel (25%) and aluminum (10%). The tariffs apply to processed raw materials (steel/aluminum plate, sheets, bars, etc.), but not finished products (e.g., wheels, exhausts, etc.). At issue is excess global metal production that has reduced prices and resulted in the closure of many U.S. factories. The government estimates that U.S. steel mills are operating at 73% of capacity and more than half of U.S. aluminum capacity is dormant. Among other factors, the U.S. government contends China has built too many factories and is over-producing. Some countries and non-U.S. companies are also dumping/subsidizing the product (selling below market price in the United States). 

The steel/aluminum tariffs took effect March 23, 2018, but price hikes and hoarding occurred months before in anticipation of the tariffs. U.S. allied countries may seek an exemption if they can demonstrate fair trade practices. At this time, imports from Canada and Mexico are temporarily exempted from the tariffs, but are tied to a successful renegotiation of the NAFTA accord. Imports from Argentina, Australia, Brazil, the European Union and South Korea are also temporarily exempted. 

U.S.-based companies are eligible for a one-year tariff exclusion if they can demonstrate that the foreign-produced material is not made in the United States in reasonably available quantity or satisfactory quality. 

File an exclusion request for steel and aluminum.

China Tariffs

The U.S. government has threatened but not yet imposed additional tariffs on imports from China, and China has threatened retaliation. Tariffs on Chinese goods could take effect as early as June if the two countries are unable to resolve trade disputes. The United States is pressing for more balanced trade and an end to practices that force companies to transfer their technology to China. 

The U.S. Trade Representative (USTR) published a list of about 1,300 product categories covering nearly $50 billion worth of U.S. imports from China that could be subject to a proposed 25% tariff. The product list includes some miscellaneous metal and rubber parts for auto equipment, chemicals, machinery, tools, measurement and medical devices. If trade negotiations do not make sufficient progress, another $100 billion worth of U.S. imports may be subject to tariffs. The retaliatory tariffs threatened by China are targeted primarily at U.S. agricultural products.

The proposed U.S. tariff list is subject to public comment and revision. A public hearing is scheduled for May 15 before the U.S. International Trade Commission.

Written comments are due by May 11.

SEMA has joined forces with other business groups, including the Alliance for Competitive Steel and Aluminum Trade (ACSAT), to warn President Trump and Congress that the tariffs have the potential to harm American companies, workers and consumers. Already there is marketplace confusion on how they are being imposed and their potential impact. SEMA is closely monitoring this matter and will keep members informed as developments unfold.

If your company is filing comments or seeking an exclusion, or you have questions, please contact Stuart Gosswein at stuartg@sema.org.

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