In a surprise announcement after hours on Friday January 24, 2020, the White House announced that it plans to impose an additional 25 percent tariff on some steel articles and 10 percent on some aluminum articles starting February 8, 2020 under Section 232 of the Trade Expansion Act of 1962.  A proclamation issued by the White House indicated that these new tariffs are being imposed due to the fact that there has been a surge in imports in certain derivative articles of steel and aluminum, and because domestic capacity has not risen as originally expected following imposition of the initial steel and aluminum tariffs in March 2018.

The additional tariffs on steel derivatives will apply to goods from all countries except for Argentina, Australia, Brazil, Canada, Mexico, and South Korea. The additional tariffs on aluminum derivatives will apply to goods from all countries except Argentina, Australia, Canada, and Mexico.

According to the summary provided in the announcement, several products have had a history of increased imports with some products surging beyond the average four percent increase across all products.  According to the announcement, the increase is the result of an assessment by Commerce Secretary Wilbur Ross that “foreign producers of these derivative articles have increased shipments of such articles to the United States to circumvent the duties on aluminum articles and steel articles.” The products affected by these additional tariffs are currently either at a zero percent tariff rate or have low tariff rates.  The metals also have to account for at least two-thirds of the product’s cost, according to the proclamation. Some examples of targeted products include steel nails, tacks and corrugated nails and aluminum automobile stampings, aluminum wire and cables.  We encourage companies to review the two Annexes to the proclamation containing the full lists of steel and aluminum products affected by the Section 232 tariffs.

It is important to note that articles imported will retain “privileged foreign status” even when imported into a foreign trade zone and that these duties are not eligible for duty drawback upon re-export.

The covered steel items and subheadings are:

  • Nails, tacks (other than thumb tacks), drawing pins, corrugated nails, staples (other than those of heading 8305) and similar articles, of iron or steel, whether or not with heads of other material (excluding such articles with heads of copper), suitable for use in powder-actuated hand tools, threaded (described in subheading 7317.00.30)
  • Nails, tacks (other than thumb tacks), drawing pins, corrugated nails, staples (other than those of heading 8305) and similar articles, of iron or steel, whether or not with heads of other ma­terial (excluding such articles with heads of copper), of one piece construction, whether or not made of round wire; the foregoing described in statistical reporting numbers 7317.00.5503, 7317.00.5505, 7317.00.5507, 7317.00.5560, 7317.00.5580 or 7317.00.6560 only and not in oth­er statistical reporting numbers of subheadings 7317.00.55 and 7317.00.65
  • Bumper stampings of steel, the foregoing comprising parts and accessories of the motor vehicles of headings 8701 to 8705 (described in subheading 8708.10.30)
  • Body stampings of steel, for tractors suitable for agricultural use (described in subheading 8708.29.21)

 

The covered aluminum items and subheadings are:

  • Stranded wire, cables, plaited bands and the like, including slings and similar articles, of alumi­num and with steel core, not electrically insulated; the foregoing fitted with fittings or made up into articles (described in subheading 7614.10.50);
  • Stranded wire, cables, plaited bands and the like, including slings and similar articles, of alumi­num and not with steel core, not electrically insulated; the foregoing comprising electrical con­ductors, not fitted with fittings or made up into articles (described in subheading 7614.90.20);
  • Stranded wire, cables, plaited bands and the like, including slings and similar articles, of alumi­num and not with steel core, not electrically insulated; the foregoing not comprising electrical conductors, not fitted with fittings or made up into articles (described in subheading 7614.90.40);
  • Stranded wire, cables, plaited bands and the like, including slings and similar articles, of alumi­num and not with steel core, not electrically insulated; the foregoing fitted with fittings or made up into articles (described in subheading 7614.90.50);
  • Bumper stampings of aluminum, the foregoing comprising parts and accessories of the motor 15 vehicles of headings 8701 to 8705 (described in subheading 8708.10.30); and
  • Body stampings of aluminum, for tractors suitable for agricultural use (described in subheading 8708.29.21).

We will continue to monitor this situation and will provide future updates as developments occur. Please contact Husch Blackwell’s International Trade and Supply Chain team for more information.