March 20, 2023

How Did U.S. Section 232 Tariffs Impact Various Industries?

Last week, the U.S. International Trade Commission (ITC) released a report outlining the economic impact the United States’ Section 232 and Section 232 tariffs had on U.S. companies. Please note: MSCI is reporting this information for members’ information only. Our position on the Section 232 metals tariffs is stated below.

The report found that, on average from 2018 to 2021:

  • U.S. importers bore nearly the full cost of these tariffs because import prices increased at the same rate as the tariffs. Specifically, prices increased by about one percent for each one percent increase in the tariffs under sections 232 and 301.
  • Section 232 tariffs reduced imports of affected steel products by 24 percent, increased the price of steel products in the United States by 2.4 percent, and increased U.S. production of steel products by 1.9 percent. U.S. production of steel was $1.3 billion higher in 2021 due to section 232 tariffs.
  • Section 232 tariffs reduced imports of affected aluminum products by 31 percent, increased the price of aluminum products in the United States by 1.6 percent, and increased U.S. production of aluminum products by 3.6 percent. U.S. production of aluminum was $0.9 billion higher in 2021 due to section 232 tariffs.
  • Section 232 increased domestic sourcing, and reduced production in downstream industries in the United States that use steel and aluminum products as inputs because of increased prices, although the magnitude of those effects varied across industries. They also increased prices in downstream industries 0.2 percent on average, and decreased production in downstream industries 0.6 percent on average. U.S. production in downstream industries was $3.5 billion less in 2021 due to section 232 tariffs.
  • Across all affected sectors, section 301 tariffs reduced imports from China by 13 percent, increased the value of U.S. production by 0.4 percent, and increased the price of U.S. products by 0.2 percent.

Read more here and here and read the full ITC report here.

As a reminder, when it comes to Section 232 tariffs, Connecting the Dots is reporting the results of this case for members’ information only. MSCI consistently has argued that global overcapacity and other unfair trading practices, particularly by China, have harmed the U.S. steel and aluminum markets.

To address this circumvention, MSCI has advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements, including the United States Mexico Canada Agreement (USMCA).

MSCI also asked that Canada and Mexico be excluded from any trade penalties.

Click here to review all of MSCI’s advocacy on Section 232 tariffs.

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