The Office of the U.S. Trade Representative will soon release a list of the 1,300 tariff lines from China recommended because of China's forced technology transfer, forced joint ventures, intellectual property theft and technology licensing restrictions (see 1803220030). Within that list, the agency will propose 25 percent tariffs on aerospace, information and communication technology, and certain machinery, the White House said in a fact sheet. The total value of goods subject to levies will be $50 billion, the amount the administration says is the annual cost to American businesses because of China's unfair restrictions.
Section 232 Tariffs
The United States currently maintains a 25% tariff on steel imports and 10% on tariff on aluminum imports under Section 232 of the Trade Expansion Act of 1962. In 2018, the Trump administration imposed Section 232 Tariffs on steel and aluminum imports into the United States, citing national security concerns. The U.S. agreed to lift tariffs on Canada and Mexico after the signing of the United States-Mexico-Canada Agreement (USMCA), and reached deals with the European Union, Japan and other countries to replace the tariffs with quotas for steel and aluminum imports into the U.S.
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).
CBP will be "closely monitoring importers’ compliance with the Section 232 measures," which take effect on March 23, a CBP spokesman said. "CBP will enforce the remedies imposed by the President under Section 232 on imports of steel and aluminum from covered countries into the United States," he said. "Companies will be responsible for paying the tariff while their exclusion is under consideration. Imports subject to these measures will be processed through CBP’s Automated Commercial Environment (ACE) entry processing system, which CBP uses to determine admissibility and duty requirements for imported goods."
The Commerce Department will give blanket exclusions to the Section 232 tariffs on steel and aluminum in some cases, Commerce Secretary Wilbur Ross said at a March 22 House Ways and Means hearing. "We do have the discretion to make broader exclusions available to all importers of those particular products if we find the circumstances warranted." Commerce may also allow for retroactivity for tariff exclusions and has asked CBP to use an "an escrow account," similar to the process for antidumping and countervailing duties, Ross said.
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.
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.
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.
International Trade Today is providing readers with some of the top stories for March 12-16 in case they were missed.
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.