On 6 August 2020, the US announced that a Section 232 tariff of 10% would again be applied to aluminum imports from Canada, effective 16 August. Whether your company has been following these actions for the past few years or is just now tuning in, TradeMoves is here to help you gain the background needed to understand what Section 232 is and why it is important. What is Section 232? Section 232 of the Trade Expansion Act of 1962 gives the US the capability to investigate and react to imports that are deemed a threat to national security. Although “national security” is not defined in Section 232, the framework to these investigations explore areas such as the impact of an import on a domestic industry that is used for infrastructure or national defense. When evaluating imports, the Department of Commerce examines:
Investigations can be requested and carried out by the Department of Commerce. In addition to a Department of Commerce request, any other department, agency head or interested party can make a request for an investigation to be carried out.[1]
Section 232 and the Trump Administration Prior to the Trump Administration, tariffs had not been implemented under Section 232 since 1986.[2] The last Section 232 investigation in 2001 explored imports of iron ore and semi-finished steel. In April 2017, the Commerce Department opened Section 232 investigations into steel and aluminum imports from many countries. In both investigations, the Commerce Department found that imports of these products were a threat to US national security and recommended actions to be taken to limit imports and protect US steel and aluminum industries.[3] On 31 May 2018, following the outcome of the Section 232 investigation and subsequent failed negotiations with steel and aluminum producing countries, President Trump announced a 25% additional tariff on steel and 10% additional tariff on aluminum imports from Canada, Mexico, and the European Union.[4] Other concluded and ongoing Section 232 investigations during the Trump Administration have explored products such as automobiles and automobile parts, uranium, titanium sponge, cranes, and vanadium.[5] Retaliation and Reconciliation by Affected Nations After the Section 232 tariffs were levied in 2018 against Canada, Mexico, the EU, India, Russia, and Turkey as a result of the affirmative Section 232 investigation findings, each of these nations retaliated against US imports. Canada imposed tariffs of almost $12.6 billion on US aluminum, steel, and other products.[6] Mexico implemented a two-part retaliation, raising tariffs on a variety of primarily agricultural US imports, amounting to around $3 billion. [7] The EU retaliated with “rebalancing measures” which amounted to duties of over $3 billion on a variety of US products.[8] China responded with additional retaliatory tariffs on $3 billion worth of US agricultural products, including fruits, nut, wine, and pork, on top of US steel and aluminum products. In May 2019, the additional tariffs on steel and aluminum imports from both Mexico and Canada were dropped, and subsequently their retaliatory tariffs on a variety of US products ended due to USMCA negotiations.[9] However, the retaliatory tariffs from China, the EU, India, Russia, and Turkey continue to apply. August 2020 Actions The statement from the United States Trade Representative’s earlier this month announcing the revival of the US Section 232 tariffs on Canadian aluminum imports cited that, “since the President exempted Canada [from Section 232 duties on Aluminum], imports from Canada of the product that accounts for the largest share of Canada's aluminum exports to the United States have surged above historical levels.”[10] In response, Canada has announced that a 10% retaliatory tariff will go into effect on a list of US aluminum products by 16 September 2020 and will remain in effect until the US Section 232 tariffs are once again removed .[11] As a result, the cost of aluminum products are expected to increase whether sourced domestically or imported, and US aluminum products may be more expensive in Canada. Visit the US Harmonized Tariff Schedule Search Engine to find the tariff code for your products to determine if they are targeted in either actions. Contact TradeMoves if you would like further information on how these recent actions may impact your US manufacturing operations. Colleen Cosey [email protected] [1] Congressional Research Service, Section 232 of the Trade Expansion Act of 1962 (30 June 2020) [2] Ibid. [3] Congressional Research Service, Pedal to the Metal: Commerce Recommends Revving Up Trade Measures on Steel and Aluminum, (21 February 2018) [4] Presidential Proclamation on Adjusting Imports of Steel into the United States (8 March 2018) [5] Congressional Research Service, Section 232 of the Trade Expansion Act of 1962 (30 June 2020) [6] Government of Canada, Steel and Aluminum (31 December 2019) [7] Rodriguez, Sabrina, “Mexico imposes retaliatory tariffs on dozens of U.S. goods” Politico (5 July 2018) [8] European Union, EU adopts rebalancing measures in reaction to US steel and aluminium tariffs (20 June 2018) [9] Salama, Vivian; Josh Zumbrun, and Kim Mackrael “U.S. Reaches Deal With Canada, Mexico to End Steel and Aluminum Tariffs” Wall Street Journal (17 May 2019) [10] United States Trade Representative, Statement on Presidential Proclamation (6 August 2020) [11] Government of Canada, Notice of intent to impose countermeasures action against the United States in response to tariffs on Canadian aluminum products (7 August 2020) Comments are closed.
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