The Senate Finance Committee will question Commerce Secretary Wilbur Ross on June 20 about the effects of Section 232 aluminum and steel tariffs and the investigation into auto and auto part imports, which President Donald Trump says are a threat to national security. In announcing the hearing, Chairman Orrin Hatch, R-Utah, said, “While we share a common goal of pursuing a pro-growth, pro-America agenda, I have made no secret my concerns with the administration’s use of 232 tariffs." He said the cost to manufacturers undermines the positive effects of tax reform. "I remain committed to working with this administration to push trade policies that open up markets for American goods and increase U.S. competitiveness,” he said.
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.
The entire congressional delegation from Washington state sent a letter to the U.S. trade representative, asking him to negotiate a solution with countries facing Section 232 steel and aluminum tariffs, because retaliatory tariffs on apples, cherries, pears and potatoes will cost the state's farmers tens of millions of dollars. The letter talks about cherry sales in China, apple sales in India, China and Mexico, and notes, "With cherry harvest beginning in the Pacific Northwest, time is of the essence for our growers."
An amendment that would stop the deal to lift an export ban on Chinese telecom equipment maker ZTE is expected to pass the Senate June 18 as part of the defense authorization bill. Since the House of Representatives did not include such an amendment in its version, passed in May, conference committee members would have to agree to include it in the final version. House Speaker Paul Ryan, who will not serve on the committee, said he doesn't know what position the House negotiators will take. "I'm going to leave it to our conferees," he said at a press conference at the Capitol June 14.
The Coalition of American Metal Manufacturers and Users posted a "comprehensive list of retaliatory tariffs" as of June 11. The list covers retaliatory tariffs, either currently in effect or proposed, from Canada, China, the European Union, India and Mexico. "Other countries including Japan, Russia and Turkey have warned of potential retaliation but have not announced formal tariffs," the group said. The tariffs are in response to Section 232 tariffs on U.S. imports of steel and aluminum. The Mexican tariffs took effect on June 5 (see 1806050041), while Canada's take effect July 1 and the EU's on June 20 (see 1806010022). China's tariffs took effect April 2, and India's take effect on June 21.
An amendment aimed at requiring a vote from Congress before Section 232 tariffs can be imposed was blocked in the Senate on June 12. Sen. Bob Corker , R-Tenn., said he understood that all the powers in the Senate were arrayed against his effort receiving a vote. His proposal would have not only required that Congress approve any tariffs against auto parts and autos based on national security grounds, but also would have been retroactive, so that Congress could have rolled back the 232 tariffs on steel and aluminum (see 1806060018). The amendment was blocked on a procedural technicality -- that bills that affect revenue must start in the House of Representatives -- but Corker said on the floor of the Senate it was clear that wasn't the true reason. He said that Republican senators were fearful of upsetting the president. He said what he's been told since he proposed attaching his amendment to the defense authorization bill was: "Don't poke the bear!"
President Donald Trump has repeatedly vowed to raise tariffs on longtime allies because, in his view, they have ripped off America. But at a post-G-7 press conference, he laid out the consequence if they don't drop their tariffs to the same level as the U.S. "It's going to change. They have no choice. If it's not going to change, we're not going to trade with them," he said. He listed Canada, the European Union -- which he called "brutal" -- and India as offenders that could be barred from exporting to the U.S.
It's not clear that the president's authorities under Section 232 allow for the elimination of drawback, law firm Neville Peterson said in a blog post. President Donald Trump said in April that drawback would not be allowed for entries subject to the Section 232 tariffs (see 1804300064). "While this is a close question, the President’s power under Section 232 is limited to 'adjust[ing] imports,'” the law firm said. "It seems unlikely that the President can take action respecting exports, the activity which generally triggers claims for duty drawback."
BALTIMORE -- The first round of Section 232 product exclusions should be released soon, said Rich Ashooh, assistant secretary for export administration at the Department of Commerce. "The [Commerce] secretary is very anxious to reach that milestone," he said in response to a question from International Trade Today. Ashooh spoke at the annual American Association of Exporters and Importers Conference June 7.
Companies that have made requests for product exclusions on South Korean, Brazilian or Argentinian steel imports will be denied, a Commerce Department spokesman said June 6. The proclamation only makes product exclusions available to goods imported from countries that face tariffs, not to those that have exports constrained by quotas. Brazil is the second-largest steel exporter for the U.S., and South Korea is third.
Proclamations ending exemptions from Section 232 tariffs on steel and aluminum for the European Union, Mexico and Canada, and setting new quotas on the products from Argentina and Brazil, were published June 5. Presidential Proclamation 9758, issued May 31 includes an annex detailing new quotas on Argentina aluminum, part of that country’s agreement with the U.S. to avoid the 10 percent tariff. Presidential Proclamation 9759, also issued May 31, sets new quotas on iron and steel products from Argentina and Brazil, with many quota amounts set from the beginning at zero, as well as other changes to Section 232 provisions for steel in the tariff schedule (see 1806010034). The tariff changes took effect June 1.