With Biden Administration Largely Silent, Debate On Section 232 Tariffs Continues
In her first interview since Senate confirmation, U.S. Trade Representative Katherine Tai told The Wall Street Journal that the Biden administration is not ready to lift tariffs on Chinese imports. While Tai did not mention the Trump administration’s Section 232 tariffs on aluminum and steel specifically, she said she is aware that there are calls to remove penalties on China. She explained that “yanking” them, however, could be harmful to the U.S. economy unless the change is “communicated in a way so that the actors in the economy can make adjustments.”
In other words: the industrial metals industry still awaits word of the future of these penalties.
While the Biden administration has been largely silent on the future of the metals tariffs, however, think tanks, trade associations, and individual companies have weighed in on the matter. On March 24, for example, the Economic Policy Institute issued a report stating its belief that the tariffs should stay in place. As S&P Global Platts reported, EPI found that, following implementation of the Section 232 penalties, and before the global downturn caused by the coronavirus pandemic, U.S. steel output, employment, capital investment, and financial performance all improved.
The report concludes, “Premature relaxation or elimination of Section 232 measures, in the absence of any concrete measures to eliminate excess capacity and trade-distorting policies that contribute to the global steel glut, would put the U.S. steel industry at risk.” Read the full report here.
On the other side of the spectrum, the Tariff Reform Coalition, which is comprised of 37 associations, asked the Biden administration to remove the Section 232 metals tariffs and to reassess Section 301 tariffs on products coming from China, which also were imposed by the Trump administration. Automakers support this coalition, which, last week issued these four recommendations for policymakers to consider.
The coalition advised the president and Congress to:
- Remove Section 232 metals tariffs and use trade laws that are “more consistent with the World Trade Organization” to address the issue of global overcapacity;
- Reassess the Section 301 tariffs and consider other approaches to addressing China’s unfair trade practices;
- Schedule public hearings for interested parties on the tariffs and provide oversight regarding the purpose of the Section 232 and Section 301 tariffs and whether the penalties are achieving their objectives; and
- Revise the existing Section 232 and Section 301 exclusion processes.
Read more here.
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As a reminder, 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, in 2017 MSCI 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.