Section 232 Tariffs

President Donald Trump on Aug. 14 issued a memorandum directing U.S. Trade Representative Robert Lighthizer to determine whether to investigate Chinese “laws, policies, practices, or actions” that might be harming U.S. intellectual property rights, innovation or technological development. The memo pointed to language in the Trade Act of 1974 that requires the Office of the U.S. Trade Representative to undertake several requirements in self-initiating an investigation under Section 301 of that law. Section 301 gives the president broad authority, including import duties, to retaliate against restrictions found to “burden or restrict” U.S. commerce.

Twenty-three House lawmakers signed a letter this week to President Donald Trump urging him to exempt tinplate steel and aluminum for food packaging in any import restrictions initiated to the administration’s ongoing Section 232 national security reviews of steel and aluminum imports, the office of Rep. Don Bacon, R-Neb., announced. “The domestic canned food supply chain and flexible packaging industry generates more than $100 billion in total economic activity in the U.S. and employs tens of thousands of American workers,” Bacon said in a statement. “This industry provides some of the safest, most affordable food available to consumers today. We will continue to keep pressing for what we believe is right for America and our constituents.” Tinplate steel composes about 60 percent of the cost of a can, meaning a tariff even as low as 5 percent would raise the cost of goods by 4.2 cents each, “inevitably” passing along higher expenses to consumers, the announcement says.

Nine domestic industry groups urged Commerce Secretary Wilbur Ross on July 18 to persevere with the Trump administration’s Section 232 investigations on steel and aluminum, despite “vague speculation” about trade retaliation. “Global trade has been nonreciprocal, in part, because past administrations have wrongly viewed enforcement of trade rules as protectionism even as other countries made full use of those rules,” the groups said in a July 18 letter (here). The 1994 General Agreement on Tariffs and Trade allows countries to protect national security, and the World Trade Organization system prevents any “uncontrollable trade retaliation” for using the provision. There have been no such retaliatory countermeasures leveled against nations that assess trade measures based on national security, the groups wrote.

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Lawmakers urged U.S. Trade Representative Robert Lighthizer to streamline customs procedures in the upcoming NAFTA renegotiation during a June 22 hearing at which House Republicans also joined their Democratic colleagues in calling for discretion in the Trump administration’s ongoing Section 232 metals investigations. During a House Ways and Means Committee hearing on Trump administration trade policy, Lighthizer said trade facilitation would be part of the negotiations. While acknowledging the possibility for "technical" disagreements on customs provisions, he said he “can’t imagine” that NAFTA parties would differ in "direction” on customs talks. Committee Chairman Kevin Brady, R-Texas, in his opening statement called for updates to NAFTA to reflect “modern realities” of customs barriers, digital commerce, intellectual property and state-owned enterprises, among other areas.

Twelve Democrats from the House and Senate are calling for the Trump administration to give stakeholders the opportunity to provide feedback on the Commerce Department’s ongoing Section 232 investigations on steel and aluminum imports, according to a June 20 letter they sent to Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer (here). The lawmakers also requested that the administration fully consult with Congress on its considered approach before a decision is made. “Given the significant implications these proceedings could have for jobs and economic growth across the country, it is particularly essential that the Administration provide full transparency and due process when conducting these investigations,” the lawmakers wrote. “While swift relief is vital, it need not come at the expense of due process.” If the reviews find metal imports endanger U.S. national security, the Trump administration could impose tariffs, quotas or other import restraints.

The canned food industry on June 12 urged President Donald Trump and Commerce Secretary Wilbur Ross to exclude tinplate steel from tariffs or other restrictions on such imports that could be taken pursuant to Commerce’s ongoing Section 232 steel investigation, the Can Manufacturers Institute said in a press release (here). Almost 20 groups representing the canned food industry asked the administration to exempt tinplate steel because it isn’t used in defense or national security applications. Tariffs or trade barriers would harshly impact those on governmental food assistance and diminish the value of taxpayer-funded federal food assistance programs, the release says. The White House and Commerce didn’t immediately comment. Commerce is expected to finish its Section 232 investigation this month (see 1705240034).

There's still some question as to exactly how broad the Commerce Department's Section 232 investigations on steel and aluminum imports will be (see 1704200029 and 1704270024), members of the trade community said during a panel discussion May 3. The broadness of the administration’s definition of “national security” will determine the range of products covered by any safeguard measures, Allegheny Technologies Vice President Terrence Hartford said during a Kelley Drye event examining the first 100 days of Donald Trump’s presidency. Commerce Department officials are also under more pressure to finish antidumping and countervailing determinations early, said the panelists.

President Donald Trump signed a memo on April 27 that outlines the Commerce Department’s Section 232 investigation into aluminum imports (here), which started the day before (see 1704270024). The memo orders the investigation to take into account how the quantities, availability, character and use of those imports affect the U.S.’s ability to meet national security requirements, noting the close relationship between the nation’s economic welfare and national security. Should the investigation find that aluminum imports are threatening or impairing national security, the report must recommend actions and steps to adjust imports so they won’t have that impact, the memo said.

The Commerce Department on April 26 started an investigation into aluminum imports that could give President Donald Trump broad authority to level tariffs or quotas if it finds that the imports endanger national security, Commerce Secretary Wilbur Ross said during an April 26 briefing. “It is an investigation,” Ross said. “It is not one that has come to a conclusion. Therefore, we are not levying countervailing duties or taking any other action. This simply is starting the process and trying to accelerate it.” While aluminum imports “have been flooding” the U.S., the investigation lead to a decision on whether to respond with a trade remedy or some alternative, Ross said. Asked about the possibility of World Trade Organization actions taken in connection with the U.S. investigation, Ross said the administration will act “based on our view as to what are the proper rules, and our view as to who’s violating those rules. The WTO will do what they do.”