EU and Six Countries Initially Exempt From Section 232 Tariffs on Steel and Aluminum, USTR Says

Imposition of upcoming Section 232 tariffs on steel and aluminum products will be paused for a set of countries currently in negotiations with the U.S. over potential exemptions, U.S. Trade Representative Robert Lighthizer said March 22 in testimony to the Senate Finance Committee. The European Union, Australia, Argentina, Brazil and South Korea will join Mexico and Canada as initially and temporarily exempt from the tariffs, which are set to take effect at 12:01 a.m. March 23 (see 1803080025).

Lighthizer had mentioned the possibility of the initial exemptions in a House hearing the previous day (see 1803210044). President Donald Trump decided to “pause the imposition of the tariffs” while the administration can determine whether these countries meet a “certain set of criteria” and “should get out.” Tariffs are initially set at 25 percent for covered steel products, and at 10 percent for covered aluminum (see 1803140030).

The International Trade Commission will implement the new tariffs in the schedule some time on March 23, an ITC spokeswoman said. Though the presidential proclamation announcing the tariffs only mentioned exemptions for Canada and Mexico, “further changes” could be coming in the form of additional proclamations, she said.

During the hearing, committee leadership criticized the chaotic implementation of the Section 232 “national security” safeguards. “And I am astonished at the process -- or, in reality, the lack thereof -- for implementing the tariffs so far,” Chairman Orrin Hatch, R-Utah, said in his opening remarks. “Ambassador Lighthizer, you have been tasked with working with our trading partners on exemptions from the new tariffs. These tariffs are slated to take effect about 14 hours from now. There is no clarity on country exemptions, and the recently announced process for product exclusions is prolonged and unnecessarily cumbersome.” BIS announced the process for requesting product-specific exemptions on March 19 (see 1803190028).

Speaking more broadly of the administration’s overall trade policy, ranking member Ron Wyden, D-Ore., echoed those concerns. “Anybody reading the trade policy news on the business pages is probably suffering from a nasty case of whiplash,” he said. “Trying to decipher all that news, it is hard to identify a coherent strategy that will help American workers, businesses and farmers when the dust settles.”

Discussions at the hearing also turned to ongoing NAFTA negotiations. Asked by Sen. Chuck Grassley, R-Iowa, if his constituents can be told they’re “past the point of worrying about withdrawal from NAFTA,” Lighthizer responded “no.” Lighthizer also mentioned the potential for entering into individual trade agreements with members of the newly signed Trans-Pacific Partnership (see 1803080059). While it may be difficult to get the entire group of 11 countries back to the table and have them agree to changes that would make the U.S. amenable to TPP, you could “essentially bring in 95 percent” of the growth potential from TPP through trade deals with Japan, Malaysia and Vietnam, he said. The U.S. could also upgrade agreements with the six TPP countries already covered by U.S. free trade agreements. The U.S. has asked Japan to begin negotiations on an FTA, he said.

With an eye toward these potential trade negotiations, President Donald Trump recently asked Congress for an extension of Trade Promotion Authority until 2021. “We look forward to working with you on these new deals,” Lighthizer said.