Section 232

The Office of the U.S. Trade Representative (USTR) announced that it had reached an agreement with South Korea to provide the country with a long term exemption from the 25 percent tariff on steel products imposed by the President under Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862). Instead,…

On Monday March 19, 2018, the Department of Commerce published its interim rule for the submission of exclusions requests for Section 232 tariffs announced by the White House on March 8, 2018.

The rules published by Commerce are interim rules and comments on the rules must be received by Commerce no later than May 18, 2018. Meanwhile, the rules announced will be in effect.

U.S. importers and users now will need to manage to understand, navigate, and plan, based upon the onerous task of requesting exclusions. There are two different exclusion processes, which are distinct: (1) country exclusions which are handled by the United States Trade Representatives (USTR) office; and (2) product specific exclusions which will be handled by Commerce.

The recent announcement by the White House that it intends to unilaterally impose 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports from all countries except Canada and Mexico has created significant uncertainty among foreign exporters.

It is of great import that Canada and Mexico are excluded from the imposition of section 232 duties for the time being. The European Union, Australia and South Korea have expressed a desire for similar exclusions to be applied to them. In fact, the EU and Australia are almost assured of an exemption based upon press reports. But where does that leave other important allies such as Turkey, India, Brazil and a host of other steel-exporting nations?

President Trump announced on Thursday, March 1, that he will impose tariffs on imports of certain steel and aluminum products. We anticipate the President will formally sign the trade measures announced today next week and that they will include an additional tariff of 25% on imports of steel products and 10% on imports of aluminum products covered under the proclamation.

The Department of Commerce released its reports recommending remedies with respect to the Section 232 investigations of steel and aluminum today, February 16. The steel report was submitted to the White House on January 11, 2018 and started a statutory 90-day clock for the President to make a decision on a course of action. The aluminum report was submitted on January 19, 2018 and similarly started the statutory 90 days for the decision.

On August 14, 2017, the Trump Administration moved toward self-initiating a case against China under section 301 of the Trade Act of 1974. That legal provision is broad, and  authorizes the President to “take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.” Past administrations have been hesitant to use the broad powers of the act to impose additional tariffs and quotas due largely to the possibility of retaliation and the uncertain effect on US companies. The Trump Administration announced that it was using the broad statute to zero in on issues involving U.S. intellectual property rights, theft of such trade secrets, and pressures by China forcing U.S. companies to transfer technological knowledge before setting up operations in China.

Reports from numerous sources, including the New York Times and Politico, indicate that the Trump Administration is on the verge of self-initiating a case against China under section 301 of the Trade Act of 1974. That legal provision is broad, and authorizes the President to “take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.” Past administrations have been hesitant to use the broad powers of the act to impose additional tariffs and quotas due largely to the possibility of retaliation and the uncertain effect on US companies. It appears that the Trump Administration may have a very different attitude toward such risks.

On Tuesday, July 25, President Trump spoke with The Wall Street Journal, mentioning that the administration would be taking its time on determining whether to restrict steel imports. Trump and Commerce Secretary Wilbur Ross announced in April that the Administration would be investigating the effects of steel and aluminum imports on national security under Section 232 of the Trade Expansion Act of 1962. Although the law gives Commerce 270 days to make its recommendations, their self-imposed deadline on the report for steel was June 30, which came and went with no action.