Introduction

The Commerce Department recently released its redacted public version of the Section 232 reports on the effects of imports of steel and aluminium on national security.

Both the steel and aluminium reports provide a range of options for the president to consider in restricting imports of aluminium and steel products.

Recommendations

Steel The options for steel include:

  • a global tariff of at least 24% on all steel imports from all countries;
  • a tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, the Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States; or
  • a quota on all steel products from all countries equal to 63% of each country's 2017 exports to the United States.

Each of these remedies is intended to increase domestic steel production from its present 73% of capacity to approximately an 80% operating rate – the minimum rate needed for the long-term viability of the industry. Each remedy applies measures to all countries and all steel products to prevent circumvention.

Aluminium The options for aluminium imports include:

  • a tariff of at least 7.7% on all aluminium exports from all countries;
  • a tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam – all other countries would be subject to quotas equal to 100% of their 2017 exports to the United States; or
  • a quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.

Each of the three proposals is intended to raise production of aluminium from the present 48% average capacity to 80%, a level that would provide the industry with long-term viability. Each remedy applies measures to all countries and all steel products to prevent circumvention.

Comment

The tariffs and quotas for both steel and aluminium would be in addition to any duties already in place. The report recommends that a process be put in place to allow the secretary of commerce to grant requests from US companies to exclude specific products if the US lacks sufficient domestic capacity or for national security considerations. Any exclusions granted could result in changed tariffs or quotas for the remaining products to maintain the overall effect.

The reports also provide for potential exclusions for specific countries if a specified quota level is accepted (2017 import level) and other tariffs or quotas are adjusted to compensate for any additional imports that might result.

There are no timelines provided as to duration of any of the proposed import restrictions.

This news is expected to trigger swift and pronounced reactions from trading partners and affected US downstream industries.

For further information on this topic please contact Matthew Nolan at Arent Fox LLP by telephone (+1 202 857 6000) or email (nolan.matthew@arentfox.com). The Arent Fox LLP website can be accessed at www.arentfox.com.

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