Additional Section 232 Scope to Hit More Than $800 Million in Imports

When the new 25 percent Section 232 tariffs go into effect on finished steel products, approximately $800 million in goods will be affected, according to International Trade Commission data for the last full year of imports. That does not include more than $100 million in imports from South Korea, Mexico and Canada that will be exempt from the new policy.

For aluminum goods, which will be subject to an additional 10 percent tariff, it will be about $20 million in goods with Harmonized Tariff Schedule codes that are specific to aluminum products.

The largest item for either metal is stampings that make bumpers, but those can be either aluminum or steel. In 2018, there was $486 million worth in those products imported, but $244 million of the total came from NAFTA partners.

Members of Congress who have long opposed what they see as unjustified use of Section 232 by this administration reacted with outrage. Rep. Ron Kind, D-Wis., the lead sponsor in the House of a bill that would restrict future use of the national security tariff, called the announcement “a Friday night news dump.” He issued a statement that said: “These additional tariffs are proof that the Administration's original policy goal of using tariffs to get their way isn’t working. Instead, they are doubling down on yet another example of unneeded trade escalation that will only result in more taxes on Wisconsin’s businesses, farmers, workers, and families. Congress must reassert its constitutionally-granted power in our nation’s trade policy, the White House has proven that they cannot be trusted to negotiate on their own.”

House Majority Leader Steny Hoyer, D-Md., has not been as vocal a supporter of free trade as Kind, but said the latest development shows him Congress should step up. “The Constitution, of course, gives to the Congress the right to regulate commerce. I think the Congress needs to have hearings, I think the Congress needs to articulate its own view and set policy to be followed by the administration,” he said in response to an International Trade Today question Jan. 28.

Sen. Pat Toomey, R-Pa., has been the most vocal proponent in the Senate for legislation to rein in the executive branch on Section 232. He released a statement late Jan. 27 that said: “Imported steel and aluminum do not threaten the security of the United States. Using 232 tariffs to tax these products hurts domestic workers, consumers, and our manufacturing sector. In search of relief, some manufacturers have sensibly shifted their supply chains to avoid these taxes. Instead of acknowledging the negative economic impact of these tariffs, the administration unfortunately is choosing to raise taxes on products made from steel and aluminum.” He said it would damage the economy.

Outside experts continue to question the legality of the move, as well. Former U.S. trade representative Wendy Cutler said trade lawyers are telling her that, and she expects companies will sue over the move.

Former World Trade Organization appellate body member Jennifer Hillman emailed International Trade Today to say that she thinks the report that started tariffs on steel and aluminum only allows tariffs or quotas on what was in its pages (though the use of the word “derivatives” is in the law, and that's how the administration is characterizing these products).

She said that while the Commerce Department said it was adding these targets because “it wants steel capacity at or above 80%, that is not the way 232 works. It is a one-time imposition of restraints on imports so imports won’t threaten national security. It is a real stretch of the statute to say that you can adjust the tariffs further to meet a target that was internally set.”

Terry Stewart, a retired trade lawyer in Washington, disagrees, noting that the earlier proclamation asked the Commerce secretary to monitor the flow of imports after the tariff went into effect.

“The current action by the President in essence is a minor tweak,” he said, and he believes it's less than 1 percent of the imports covered by the original proclamations, after examining the first 11 months of 2019.

“It is true that the domestic steel and aluminum industries are not operating at the levels viewed as optimal and the problem of massive excess capacity in China and other countries is little changed in fact. But if a revision were needed, the level of ambition reflected in the Proclamation seems inadequate to the task,” he wrote. “So perhaps the way to read the proclamation is a recognition by the Administration that the existing relief hasn’t achieved the full measure of relief intended and to give trading partners warning that more is possible if the underlying problems aren’t addressed.”