The European Union's ambassador to the U.S. said that as the world watches the European Union-U.S. summit in a week, they will be looking to see that “we are capable of resolving quickly and effectively our bilateral trade irritants.” He said they also want to see “that we can work and will work together to address the new challenges that sit on the nexus of technology and trade and security.” He said that export controls and cyber security measures are some of the ways to address those challenges, and there should be an announcement at the conference on those matters.
Section 232 Tariffs
The United States currently maintains a 25% tariff on steel imports and 10% on tariff on aluminum imports under Section 232 of the Trade Expansion Act of 1962. In 2018, the Trump administration imposed Section 232 Tariffs on steel and aluminum imports into the United States, citing national security concerns. The U.S. agreed to lift tariffs on Canada and Mexico after the signing of the United States-Mexico-Canada Agreement (USMCA), and reached deals with the European Union, Japan and other countries to replace the tariffs with quotas for steel and aluminum imports into the U.S.
A Japanese and a Korean economist said that trade tensions between their two countries are no longer really disrupting Korea's semiconductor industry, though they are still increasing costs for some of the Japanese exporters.
A recent Economic Policy Institute report that showed the domestic aluminum industry as thriving while the Section 232 tariffs on steel and aluminum were in place demonstrates the continued need for the tariffs, United Steelworkers International said in a news release. "The Section 232 measures are allowing the domestic aluminum industry to regrow and add jobs," union President Tom Conway said in a statement. "This includes new investment not only in aluminum production, but downstream as well. We cannot jeopardize our fragile economic recovery by lifting them prematurely. As we continue to work toward a permanent multilateral solution for global overcapacity, we must maintain and strengthen these measures so that we can rebuild our communities and safeguard our national security. Unless and until we have a comprehensive set of solutions, the 232 national security measures should remain in place."
After the European Union announced May 17 that it will not double retaliatory tariffs on U.S. exports on June 1, exporters expressed relief. More significantly, the joint statement between the EU and Office of the U.S Trade Representative said the two sides are aiming for a united approach to global overcapacity distortions that would allow the 25% and 10% tariffs under Section 232 to be removed at the end of the year. Domestic metal producers welcomed that news, but the union that represents steelworkers reacted with some alarm.
The following lawsuits were filed at the Court of International Trade during the week of May 3-9.
U.S. Trade Representative Katherine Tai, in her second day of testimony on Capitol Hill, heard again and again from members of Congress who are hearing from companies in their districts that they want Section 301 tariff exclusions back. She heard repeatedly that the 9% countervailing duties on Canadian lumber are making a bad situation worse. And she heard that the Miscellaneous Tariff Bill and Generalized System of Preferences benefits program should be renewed. On each topic, both Democrats and Republicans shared concerns, though on GSP, Republicans only spoke of the cost to importers, while Democrats worried about the effects of GSP on the eligible countries. Tai testified for more than four hours in front of the House Ways and Means Committee on May 13.
U.S. Trade Representative Katherine Tai generally avoided being pinned down on timing as she was asked about rekindling trade negotiations with the United Kingdom and Kenya, the pause on tariffs on European imports, and a solution for steel overcapacity that could make way for the lifting of Section 232 tariffs.
Over 300 U.S. manufacturers wrote to President Joe Biden to request an end to Section 232 tariffs on steel and aluminum, the Coalition of American Metal Manufacturers and Users said in a news release May 6. “Manufacturers in the United States currently face historic shortages of readily available and globally priced steel and aluminum products at a time when the country is relying on our sector to help drive the economy and overcome the unprecedented challenges caused by the COVID-19 pandemic,” the group said in the letter. “Without termination of the tariffs, this situation will worsen if Washington moves forward with an infrastructure bill to invest in America, as these projects will create more strain on domestic steel and aluminum supplies, causing delays in construction and risking manufacturing jobs.”
A witness at a Senate Finance Committee hearing on China and trade competitiveness told senators that if the Miscellaneous Tariff Bill and his company's Section 301 exclusion aren't granted retroactively, Element Electronics would be forced to move production out of the U.S.
U.S. Trade Representative Katherine Tai's conversations with her counterparts from Italy and the Netherlands addressed global overcapacity in steel, according to summaries of the video calls released April 16. The administration has suggested that Section 232 tariffs on aluminum and steel cannot be removed until overcapacity has been addressed, even when the countries subject to those tariffs are not dumping steel or aluminum in their exports to the U.S.