News & Insights

Energy Law Exchange

April 9, 2018

Trump Administration Rolls Out Section 232 Tariffs On Steel And Aluminum Imports

On March 8, 2018, President Trump exercised “his authority to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports” under Section 232 of the Trade Expansion Act of 1962. U.S. Customs and Border Protection began collecting these tariffs on March 23, 2018. On March 22, 2018, the White House announced that application of the Section 232 tariffs on the following countries with a special security relationship with the United States would be suspended until May 1, 2018: Canada, Mexico, Australia, Argentina, South Korea, Brazil, and the European Union (on behalf of its member countries).

In the case of Canada and Mexico, application of the tariffs has been temporarily suspended due to the renegotiation of the North American Free Trade Agreement (NAFTA), with the President explaining that any permanent exclusion would need to be part of a final re-negotiated NAFTA deal. For the other listed countries, the tariff suspension is to allow for negotiations to find “satisfactory alternative means to address the threatened impairment to the national security by imports of steel [and aluminum] articles from those countries.”

As of now, only South Korea has entered into an agreement, which was announced as part of the agreement to revise the Korea-U.S. Free Trade Agreement. Under the terms of this arrangement South Korea would be permanently exempted from both the steel and aluminum Section 232 tariffs, in exchange for an annual steel import quota of 2.68 million tons per year. This amounts to approximately 70 percent of South Korea’s annual exports of steel to the United States from 2015 to 2017. Negotiations with all of the other exempted countries listed above are ongoing. Furthermore, it is possible that additional countries not included in the March 22 announcement could seek modifications or exemptions from the tariffs through negotiations with the United States.

In addition to country exclusions, the Department of Commerce (Commerce) created a mechanism for U.S. parties to apply for exclusion of specific products based on “demand that is unmet by domestic production or on specific national security considerations” that will be managed by Commerce in consultation with other Federal agencies. Exclusions granted by Commerce will be for a single type of steel or aluminum product and be applicable only to the individual or organization making the exclusion request, unless a broader exclusion is approved by Commerce. Approved exclusions will remain in place for one year.

Only individuals or organizations operating in the United States that use steel or aluminum products in business activities (such as construction, manufacturing, or supplying to users) in the United States may submit an exclusion request for that steel or aluminum product. Additionally, each request must specify the business activities in the United States that serve as the basis for seeking exclusion from the tariffs.  Exclusions will only be granted in cases where “an article is not produced in the United States in a sufficient and reasonably available amount, is not produced in the United States in a satisfactory quality, or for a specific national security consideration.”

Exclusion requests will be made public via the web portal. From the time of posting on the web portal, “any individual or organization in the United States” will have 30 days to file an objection to that exclusion request. Objectors to an exclusion request should provide “specific information on the product that their company can provide that is comparable to the product that is the subject of the exclusion request.”

After this 30 day objection period, Commerce has 60 days to review and to make a determination on the exclusion request. Therefore, total processing time for exclusion requests from filing to decision is 90 days. Granted exclusions will be effective five days after publication of Commerce’s determination on the web portal.

Individuals and organizations are permitted to request exclusions for products that have already been granted an exclusion for another party. Likewise, individuals and organizations are also permitted to request exclusions for products where a prior request for exclusion has already been denied, however, the requester should submit new or different information to meet the criteria for an exclusion.