May 20, 2019

United States Lifts Section 232 Tariffs On North American Trading Partners, Adjusts Penalties On Turkey

The United States, Canada and Mexico announced Friday that the three countries had reached an agreement by which the Trump administration would lift its Section 232 tariffs on aluminum and steel product imports from the other two countries. As a joint statement by the U.S. and Canadian government explains, the United States eliminated its tariffs within two days (Sunday) of the agreement being signed and Canada eliminated its retaliatory tariffs during the same time period. Additionally, the two countries agreed to terminate all pending litigation between them in the World Trade Organization regarding the Section 232 action.

The United States and Canada also will implement effective measures to:

  • Prevent the importation of aluminum and steel that is unfairly subsidized and/or sold at dumped prices; and
  • Prevent the transshipment of aluminum and steel made outside of Canada or the United States to the other country. Canada and the United States will consult together on these measures.
  • Establish an agreed-upon process for monitoring aluminum and steel trade between them. In monitoring for surges, either country may treat products made with steel that is melted and poured in North America separately from products that are not.

Under the agreement between the United States and Canada, if imports of aluminum or steel products surge meaningfully beyond historic volumes of trade over a period of time, with consideration of market share, the importing country may request consultations with the exporting country. After such consultations, the importing party may impose duties of 25 percent for steel and 10 percent for aluminum in respect to the individual product(s) where the surge took place (on the basis of the individual product categories set forth in the attached chart). If the importing party takes such action, the exporting country agrees to retaliate only in the affected sector (i.e., aluminum and aluminum-containing products or steel).

According to CNBC, in a separate statement, the Mexican government also said it would remove retaliatory tariffs it put on the United States, cease pending litigation, set up measures to stop unfair trade practices in the aluminum and steel markets and monitor trade of the metals in North America.

In a statement to the press released after Friday’s announcement, MSCI President and CEO M. Robert Weidner, III said: “From the moment President Trump was considering 232 tariffs on metals’ imports, MSCI argued North American trading partners should be exempt. We are pleased with this decision, and also are pleased that Canada and Mexico have responded in kind. The relationship between these countries benefits metals workers and their families, and the North American economy. This action is a good step toward preserving and strengthening this important relationship. Our industry still faces a glut of global steel and aluminum overcapacity and unfair policies by which countries circumvent fair and free trade policies, but Canada and Mexico never were the issue. The United States’ focus should be on non-market economies like China that subsidize their producers and routinely thwart international law. As U.S. officials engage with their Chinese counterparts on trade, they should make efforts to address global metals overcapacity a primary goal.”

In related news: last Thursday, President Trump said he would “remove the higher tariff on steel imports from Turkey” and instead impose a 25 percent ad valorem tariff on the imports from Turkey, “commensurate with the tariff imposed on such articles imported from most countries.” The White House proclamation said the change was due to imports of steel articles from Turkey falling by 48 percent in 2018. Additionally, as Reuters reported, India delays imposing tariffs on U.S. goods in retaliation for steel and aluminum duties to June 16, 2019.

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