New tariffs on U.S. goods exported to the European Union and Canada touch on a wide range of products, with a heavy focus on steel and aluminum products. The EU and Canadian tariffs are meant as a response to the Trump administration's decision to end the exemptions from tariffs on steel and aluminum goods from the EU, Canada and Mexico (see 1805310028). Mexico also plans to initiate new tariffs on U.S. goods, though it has not yet publicly released a list of Harmonized Tariff Schedule subheadings, a spokeswoman for the Mexican Embassy in the U.S. said. China put new tariffs in place in April in response to the Section 232 tariffs.
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.
CBP created Harmonized System Update (HSU) 1808 on May 31, containing 11,876 Automated Broker Interface records and 2,228 harmonized tariff records, it said in a CSMS message. Modifications include changes related to May 31 Presidential Proclamations for tariffs on steel and aluminum (see 1805310028), CBP said. "Regulations related to alcohol administered by [the Alcohol and Tobacco Tax and Trade Bureau] are included, and the ACE HTS has been updated to reflect these changes," CBP said. CBP was waiting for TTB guidance to implement excise tax cuts for beer, wine and distilled spirits that took effect Jan. 1 (see 1801190020).
The International Trade Commission issued Revision 5 to the Harmonized Tariff Schedule late on May 31. Most changes are intended to implement the end of temporary country exemptions for the European Union, Canada and Mexico and new agreements subjecting steel from Argentina and Brazil, and aluminum from Argentina, to quotas. Quotas on steel are also changed to implement a new lower threshold for three-month quota provisions. All changes take effect June 1.
Exemptions from Section 232 tariffs on steel and aluminum for Canada, Mexico and the European Union will end on June 1, President Donald Trump announced in two presidential proclamations issued on May 31. No permanent agreement was reached for the countries, and the administration did not extend their temporary exemptions.
President Donald Trump approved the end of temporary exemptions to Section 232 tariffs on steel and aluminum from Mexico, Canada and the European Union, the White House said in a news release. "As of June 1, 2018, tariffs will no longer be suspended for steel or aluminum imports from those countries," the White House said. "The Administration will continue discussions with them and remains open to discussions with other countries." The U.S. "was unable to reach satisfactory arrangements, however, with Canada, Mexico, or the European Union, after repeatedly delaying tariffs to allow more time for discussions," the White House said in another release.
The U.S. Chamber of Commerce remains concerned for the ramifications of ending country exemptions to the Section 232 tariffs on steel and aluminum, the trade group said in a news release. "The U.S. must not expand tariffs or quotas on steel and aluminum imports to additional countries on June 1, as has been threatened," it said. Already, steel costs have increased, as has the volatility in aluminum prices, the Chamber said. "Extending the reach of these tariffs and quotas to additional countries is certain to provoke widespread retaliation from abroad and would put at risk the economic momentum achieved through the administration’s tax and regulatory reforms. We urge the administration to take this risk seriously.” The country exemptions for Canada, Mexico and the European Union are set to end on June 1 (see 1805040046).
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The Commerce Department has launched an investigation into the need for tariffs on cars and auto parts in a move widely seen as an attempt to pressure Mexico to accept a NAFTA rewrite. Commerce Secretary Wilbur Ross said on May 24 that "there is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” and the department will explore whether by damaging the U.S. economy and reducing research in auto-related technology, the decline of domestic auto and auto part manufacturing therefore is a national security issue. Currently, SUVs and trucks face a 25 percent tariff, while cars and auto parts face a 2.5 percent tariff outside the NAFTA region, or if a Canadian or Mexican vehicle fails to meet a 62.5 percent rules of origin quota.
India, which earlier submitted at the World Trade Organization a list of retaliatory tariffs for the U.S.'s Section 232 action, now has filed a case challenging the action's legality. On May 23, it circulated a request for consultations with the U.S., the first step before a panel can be convened to consider the dispute. India points not only to the fact that countries are being treated differently, but also says that the Commerce Department is using voluntary export restraints and quotas to protect domestic producers. Both are against the WTO's General Agreement on Tariffs and Trade ( GATT) rules, India alleges.
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