Trump Announces 232 Tariffs, Will Consider Requests for Exceptions from Allies

President Donald Trump announced that tariffs of 25 percent on steel and 10 percent on aluminum will take effect on March 23, but the tariffs are not going to be as global as he suggested a week ago. Canada and Mexico's exports will not be subject to the tariffs while NAFTA negotiations continue, Trump said, and assuming the U.S. can get a deal "that's fair for our workers, fair for our farmers -- we love our farmers -- fair for our manufacturers," then those countries will be exempted permanently. "I have a feeling we're going to make a deal on NAFTA," he said during a March 8 signing ceremony.

With regard to other allies, such as Germany or South Korea, Trump said "we're going to be looking at that," and there will be time to add others to the list between now and March 22. But he warned that other countries' military spending, and what the U.S. spends on those countries' defense, will be part of the evaluation. "Who's paying the bills? Who's not paying the bills? We subsidize many rich countries with our military ... so we have to stop that and that will come into it as well." He later said, "Our allies, as they like to call them, some of the countries that treat us worst on trade and on the military are our allies."

U.S. Trade Representative Robert Lighthizer will be in charge of negotiating with U.S. allies on exemptions to the tariffs, he said. In the proclamation, he wrote, "I may remove or modify the restriction on steel articles imports from that country and, if necessary, make any corresponding adjustments to the tariff as it applies to other countries."

“On the basis of the [Section] 232 investigation that the Secretary of Commerce submitted, we are, this administration is, imposing 25 percent tariffs on steel, that is 1 percent higher than the Secretary of Commerce recommended, but that’s based on additional data” that came in, said a senior administration official during a March 8 conference call with reporters before the proclamation was signed. There will also be a 10 percent tariff on aluminum, he said.

The tariffs will cover steel and aluminum products entered or withdrawn from warehouse for consumption on or after 12:01 a.m. on the March 23 effective date. Despite lots of “hair on fire rhetoric,” there “will be no significant price effects or inflationary effects or job effects downstream from the steel and aluminum industries,” the official said.

The proclamation makes no changes from Commerce’s recommendations product coverage (see 1802160020). Covered aluminum articles include unwrought aluminum (heading 7601), aluminum bars, rods and profiles (7604), aluminum wire (7605), aluminum flat-rolled products (7607 and 7607), aluminum tubes, pipes and fittings (7608 and 7609) and aluminum castings and forgings (subheadings 7616.99.51.60 and 7616.99.51.70. The tariffs cover steel articles classified in subheadings 7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90.

The proclamation gives the executive branch the flexibility to exempt certain products that are not produced domestically in sufficient amount or of a satisfactory quality, and other products can be exempted based on specific national security considerations. The relief will be granted after a request by party directly affected, and there will be instructions on how to make such a request within 10 days.

Exclusions from the tariffs for Mexico and Canada will be in effect immediately, the administration official said. “For now, Canada and Mexico will be excluded from the tariffs and we will have ongoing discussions about our security relationship. NAFTA discussions will be part of that only because NAFTA is an important part of the security relationship in the hemisphere.” The U.S. is “giving Canada and Mexico sufficient time to address these issues at the request s of the government, but it’s not open ended,” the official said. “We expect this to be resolved in a time period sufficient to allow constructive discussions.”

Intertwining the 232 tariffs and NAFTA could be problematic, House Ways and Means Ranking Member Sander Levin said March 8, before the White House proclamation, while at a Georgetown Law School Event. "To think you can use key trade policies, playing one off the other, it could lead to a harmful result," Levin said.

The problem with targeting China specifically with tariffs is that there’s a “massive overcapacity that China has built up in both aluminum and steel,” the administration official said to reporters. Even "if we get an agreement with China today on excess capacity," it would take five years or more "for them to even be able to do anything" and "in the meantime they would flood the global market and the global market in turn would flood us."

Trump said during the announcement that "we're in the midst of a big negotiation with China. I don't know if anything is going to come of it," but he said the country has to lower its trade deficit with China "one way or the other." Trump also vowed this would not be the last action to protect American workers. He said that reciprocal taxes will be coming -- that the United States will make sure that its tariffs match other countries' rates on the same products. The Commerce Secretary will continue to monitor steel imports, and will let the president know if there needs to be more action under 232 for these metals, or if the duty is no longer needed, the proclamation says.