The Bureau of Industry and Security issued a list of frequently asked questions about product exclusions from the Section 232 tariffs on steel and aluminum. Among the answered questions are how to seek a different decision if a company disagrees with a denial. If the denial is the result of an inaccurate Harmonized Tariff Schedule classification, the company should contact CBP and then resubmit the request with the correct classification. "If the denial is based on an objection, the requester may file a new exclusion request and include information documenting the reason why the new request should be granted notwithstanding the prior objection(s)," BIS said. "This information could include, for example, the documentation of the inability or refusal of the objector(s) to provide the product." The lack of denial appeal procedure is among some complaints about the exclusion process (see 1807230062).
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.
After four months, only 266 product exclusion requests have been granted, 421 were denied, and more than 26,000 are yet to be decided, House Ways and Means Trade Subcommittee Chairman Dave Reichert, R-Wash., said at a hearing on the Section 232 exclusion process. He called for numerous changes to the process in his opening statement.
President Donald Trump announced that the U.S. will "resolve the steel and aluminum issues" with the European Union after the EU agreed to buy more soybeans and liquefied natural gas, and to enter negotiations to drop non-auto industrial tariffs to zero. The EU's retaliatory tariffs will also be "resolved," said Trump.
The Section 232 steel and aluminum product exclusion process is flat-out broken, according to House Ways and Means Chairman Kevin Brady, R-Texas, and he said at least four aspects of the Commerce Department approach need to change. Brady, who was speaking to reporters at the Capitol on July 23, said the length of the exclusion -- now a year from the time it's granted -- should be longer. He said there should be a way to appeal a denial. If a product is excluded for one company, it should be excluded for all importers of the same product. And, he said, "we think you ought to grandfather major existing projects," such as pipelines under construction.
The auto industry is launching a media blitz this week with TV and print ads, and a "drive-in" press event of American workers from German, Japanese and other foreign-owned auto plants. The TV ad, paid for by the Association of Global Automakers, uses the kind of imagery often used in political ads -- a barn in a field of grain -- and a deep-voiced narrator noting that foreign automakers have plants in Indiana, Kentucky, Alabama, Georgia, Tennessee, Mississippi and Ohio. Every one of those states voted for Trump in 2016.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, called the White House's approach to tariffs "misguided and reckless," and said if the Trump administration "continues forward" with tariffs as a way to protect U.S. manufacturing, "I will work to advance trade legislation to curtail presidential trade authority." He said during a speech on the Senate floor July 17 that he is sympathetic to the effort (see 1807120023) from Sen. Bob Corker, R-Tenn., to rescind steel and aluminum tariffs and prevent tariffs on autos and auto parts, and he is discussing legislative options with his colleagues.
The retaliatory tariffs from the European Union, China, Canada, Mexico and Turkey in response to U.S. steel and aluminum tariffs are being challenged at the World Trade Organization by the Office of the U.S. Trade Representative. "The U.S. steel and aluminum duties imposed by President Trump earlier this year are justified under international agreements the United States and its trading partners have approved," the USTR said in a July 16 news release. "However, retaliatory duties on U.S. exports imposed by China, the EU, Canada, Mexico and Turkey are completely without justification under international rules.
Over a two-day review at the World Trade Organization on China's trade policies, China insisted that intellectual property violations are no longer a major issue; that its support of state-owned enterprises is no different from Fannie Mae; and that its overcapacity in steel is not a problem for global steel prices, because China only exports 9 percent of its steel. Moreover, China's Commerce Vice Minister Wang Shouwen said, addressing overcapacity needs collective actions and China stands ready to join hands with other countries to tackle this problem together.
A bipartisan bill that would require congressional approval before tariffs are imposed on national security grounds was introduced in the House of Representatives July 11. Like the so-far-unsuccessful efforts of Sen. Bob Corker, R-Tenn., the bill would be retroactive. The Section 232 tariffs and quotas on aluminum and steel would be rolled back after passage, and approval of those actions would be needed before they could resume.
It's only a "baby step" toward sparing Canada, Mexico and the European Union from steel and aluminum tariffs, as Sen. Bob Corker, R-Tenn., said, but 88 senators issued a rebuke of how the president has justified steel and aluminum tariffs under the guise of national security. Eleven senators -- all Republicans -- voted no, including both senators from Idaho, Wyoming and South Carolina. The last state could be badly damaged if President Donald Trump levies tariffs on imported auto parts under the same national security justification. Corker's home state of Tennessee also would be vulnerable if an auto parts tariff is implemented.