Canada's Foreign Minister Chrystia Freeland and Mexico's Economy Secretary Ildefonso Guajardo expressed optimism that their countries and the U.S. will be able to reach an agreement that can be sold to the public in all three countries, while U.S. Trade Representative Robert Lighthizer sounded a more cautionary note at a joint press conference at the end of the seventh round of negotiations in Mexico City. "I fear the longer we proceed the more political headwinds we will feel," Lighthizer said March 5.
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.
Following President Trump's signaling of across the board tariffs on imported steel and aluminum (see 1803010029), exactly how Canadian steel fits in is among the major unanswered questions. Canada said in a March 1 statement that "as the number one customer of American steel, Canada would view any trade restrictions on Canadian steel and aluminum as absolutely unacceptable." The Defense Department has also said Canadian steel should not face Section 232 tariffs (see 1802230018).
Withdrawing from the Trans-Pacific Partnership was bad enough, but what could come this year could be far worse, trade scholars said during a Brookings Institution panel reviewing "Trump's Trade Policy in Asia" on Feb. 28. Because President Donald Trump exited the TPP on the third day of his administration, the United States will not be able to lower barriers to beef or pork exports to Japan, and other countries that stayed in the agreement, such as Canada, will move into the gap, said Jeff Schott, a senior fellow on international trade policy at the Peterson Institute for International Economics.
After a visit at the White House, House Ways and Means Chairman Kevin Brady, R-Texas, told reporters at the Capitol that he told the president that the next step after tax reform is expanding export opportunities. "NAFTA was a good part of our discussions," he said Feb. 26. "I think there's potential major wins for President [Donald] Trump in NAFTA." Brady pointed to improvements in customs, digital trade, intellectual property and agriculture.
The Department of Defense agrees with a Section 232 investigation that concludes that systematic unfair trade practices that erode the industrial base pose a risk to national security. However, Defense Secretary James Mattis' position is that any tariffs or quotas aimed at shoring up the domestic steel and aluminum industries may have "negative impact on our key allies." Mattis, in an undated memo released by the Commerce Department on Feb. 22, wrote that there is no immediate problem with sourcing steel and aluminum for military uses, since military consumption is just 3 percent of U.S. production. The Commerce Department's report, which became public last week (see 1802160020), noted that as well.
The nominee for the Commerce Department's undersecretary for international trade may be able to get a vote on his confirmation before his wait reaches the 10-month mark. Gil Kaplan was nominated May 25, and the Senate Finance Committee unanimously approved him Sept. 7, but a hold from Minority Leader Chuck Schumer, D-N.Y., prevented his name from going to a full Senate floor vote (see 1710270015).
International Trade Today is providing readers with some of the top stories for Feb. 12-16 in case they were missed.
South Korea and China are reportedly signaling plans to challenge potential new tariffs or quotas on foreign steel and aluminum. Kang Sung-cheon, deputy minister of trade, told the local press that South Korea should not be on the list of 12 countries targeted for high U.S. tariffs, just because it imports steel from China. "Steel products imported from China are mostly used to satisfy domestic demand in the construction and shipbuilding sectors, while Korean steel shipped to the U.S. is (made up of) high-value added products for the automobile and energy industries," Kang said.
Worldwide tariffs on steel and aluminum or worldwide quotas on imports of those metals are two of the Commerce Department’s three recommendations on how to respond to plant closures and job losses in the domestic steel and aluminum industries. A flood of steel and aluminum, dumped at prices that undermine U.S. producers, is threatening the industrial base, and therefore national security, Commerce Secretary Wilbur Ross told the White House in January. On Feb. 16, he shared the details of those reports with reporters on a conference call, and posted redacted versions of both reports on the department’s website.
President Donald Trump told 15 congressional Republicans and four Democrats visiting the White House Feb. 13 that he's considering quotas or tariffs to protect domestic steel and aluminum. Producers have been decimated by dumping from China and other countries, he said. He said he'd discussed "in great detail" on the campaign trail how U.S. steel and aluminum industries have been taken advantage of by other countries.