FedEx CEO Fred Smith worries about the impact of President Donald Trump’s recent imposition of “protectionist tariffs” on imported steel and aluminum because “history has shown repeatedly that protectionism is counterproductive to economic growth,” he said on a March 20 earnings call. “The better approach is to encourage open markets and free exchange of products and services and to reduce barriers to trade,” he said. Smith thinks “the correct way to go here is to deal with China on the issues with China,” he said. The “overall” aim should be to “lower trade barriers” and tariffs around the world, “not to engage in less trade,” he said. FedEx will “continue to advocate against any move towards protectionist trade policies that could slow economic growth and undermine all the positive impacts” from the tax overhaul, company Chief Information Officer Rob Carter said. In the roughly two weeks since Trump announced he would impose the steel and aluminum tariffs on all but Canada and Mexico, “we’ve not seen any quantifiable shipper behavior change” as a result, Carter said.
An array of steel executives and the United Steelworkers' president joined House members whose districts include steel mills in celebrating the Section 232 tariffs that are slated to take effect on March 23. "National security is only as strong as American steel, and the American steel industry is strongest when we have the ability to manufacture steel from start to finish inside our own borders," said Todd Young, US Steel's chief lobbyist. Only one aluminum representative was at the Congressional Steel Caucus hearing March 21. Bauxite, the raw material for aluminum, has no domestic source.
The U.S. Trade Representative Robert Lighthizer is talking with South Korea, Australia, Argentina and the European Union about exemptions from Section 232 tariffs on aluminum and steel, and is going to begin talking to Brazil soon. He expects all those negotiations to come to a conclusion by the end of April, he told the House Ways and Means Committee. Lighthizer, who testified for more than three hours March 21, said it's ultimately up to the president but he believes it makes sense for tariffs not to apply to countries while they are in negotiations. He acknowledged that Brazil imports U.S. coal to make steel slabs, and then U.S. mills use those slabs and finish the steel. He said the agency will take that into consideration, but added, "That isn't to say, they will be successful in getting an exclusion." He also said Korea is a particular problem in the steel sector.
International Trade Today is providing readers with some of the top stories for March 12-16 in case they were missed.
House of Representatives appropriators want to know whether the Commerce Department will be able to make prompt determinations on steel and aluminum tariff product exemptions if the agency receives 4,500 applications, as it projected. The Appropriations subcommittee that handles Commerce's budget heard from Secretary Wilbur Ross on March 20. Ross said that the fiscal year 2019 budget request does ask for more staffing. "We believe we can handle the influx," he said.
CBP is likely to quickly focus on misclassification and valuation as enforcement issues involving the coming tariffs on steel and aluminum as a result of the politics and revenue involved, said Michael Roll, a lawyer at Pisani & Roll. Roll discussed the new tariffs during a webinar hosted by the Los Angeles Customs Brokers & Freight Forwarders Association of America. "That doesn't mean that they are going to jump out the gate on March 24 hitting people with penalties necessarily," but there will be a focus on "enforcement, enforcement and more enforcement," Roll said.
Product-specific exemptions from new Section 232 tariffs on aluminum and steel products will only apply to the individual or organization requesting the exemption, though additional individuals may file separate requests to obtain the same exemption, according to the Bureau of Industry and Security’s March 19 interim final rule setting procedures for exemption requests and opening up the application period (see 1803160067). BIS will normally decide whether to issue an exemption within 90 days of the request, and exemptions will remain in effect for a year, the agency said.
The European Commission is seeking input from private parties on how an increase in customs duties on products from the U.S. in response to the Section 232 tariffs on steel and aluminum from the EU would affect Europeans, it said in a notice. The EC is considering "suspension of tariff concessions under Article 8 of the [World Trade Organization] Agreement on Safeguards" and "imposition of increased customs duties on certain products," it said. "The Commission's intention is to ensure that applied additional customs duties are set at the appropriate level taking into account future developments," such as an exemption for the EU, it said.
CBP plans to provide more information about its implementation of the new Section 232 tariffs on aluminum and steel, an agency spokesman said. "CBP will issue a message via the Cargo Systems Messaging Service (CSMS) in the next few days with the entry filing requirements for the Section 232 duties," he said. The recently released annexes to the Presidential Proclamations include language allowing CBP to require additional information from importers necessary for the agency to administer the new tariff provisions, as well as any exemptions granted by the Commerce Department. (see 1803140030).
The Commerce Department Bureau of Industry and Security released a notice late on March 16 that outlines the requirements for submissions requesting exclusions to the Section 232 tariffs on steel and aluminum. "The process established in this interim final rule is limited to the issuance of product-based exclusions as authorized by the President," BIS said. "Consistent with the President’s instructions, the criteria in the forms and supplements are primarily focused on the availability of the product in the United States. The Secretary will consider information about supply in other countries to the extent relevant to determining whether specific national security considerations warrant an exclusion. Commenters on this interim final rule may submit comments regarding how and whether or not the country of origin of a proposed product should be considered by Commerce as part of the process for reviewing product-based exclusion requests." This process is "separate and apart from the process by which countries may seek exemptions from the duties imposed by the President," the agency said.