Trade Cases

Section 232: A Shot in the Foot?
Written by Sandy Williams
July 16, 2017
What should the administration consider when evaluating the potential use of Section 232 to restrict steel imports? The U.S. Chamber of Commerce, which serves as a voice for business interests in Washington and represents more than three million businesses of varying size, sector and region, offered five questions that should be answered:
Do All Steel Imports Raise National Security Questions?
The answer is no, says John Murphy, senior vice president for international policy. Plenty of steel-consuming industries have nothing to do with national security and require steel imports that are not available domestically. Imposing tariffs against all steel imports would harm those industries.
Do Steel Imports from Allies Threaten U.S. National Security?
No, has been the answer from all of America’s allies. Under NATO and other U.S. defense treaties, an attack on one country is an attack on all. Purchasing steel from allies does not undermine domestic steel producers when it comes to our common defense. Tariffs against our closest trade partners, Canada and Mexico, would harm and not help the U.S. steel industry, says Murphy.
Could Broad Steel Tariffs or Quotas Harm U.S. Competitiveness?
Yes, says the U.S. Chamber of Commerce. Murphy cites as an example Section 201 “safeguard” tariffs on steel products imposed in 2002 and 2004. The tariffs boosted costs for manufacturers that use steel to produce goods in the U.S. and, according to one study, cost 200,000 Americans their jobs—more than the total number of American employees in the U.S. steel industry at the time.
“Imposing broad tariffs or other barriers against steel imports would undermine the competitiveness of U.S. manufacturers, incentivize offshoring, and endanger more American jobs than it would protect,” says Murphy.
Will Tariffs Invite a Counter-punch from Abroad?
Yes, and quickly, according to European Commission President Jean-Claude Juncker, who said retaliation would come within days, not months, of any tariff action by the United States. Products on the hit list for EU retaliation include Florida orange juice, Kentucky bourbon and Wisconsin dairy products, says Murphy. Not only would retaliation occur, he adds, but it would test the World Trade Organization’s national security exception on tariffs and quotas. Murphy cites a Financial Times report that said if the WTO were to issue a finding against a U.S. national security claim and it was ignored by the Trump administration, it would threaten WTO credibility. Conversely, if it found in favor of the U.S, it would open the door to a “protectionist free-for-all.”
Would this Arrow Hit the Target?
Not really, says Murphy. The globally recognized problem in the steel industry is steel overcapacity. China, the largest contributor to overcapacity, accounts for just 2 percent of U.S. steel imports. China has taken steps to reduce capacity and is ahead of its current target. The G20 summit called for development of concrete policy solutions by November to reduce excess steel capacity and unanimously supported the removal of market-distorting subsides by governments and other entities to “foster a truly level playing field.”
“It’s no panacea,” says Murphy, “but it goes to the heart of the matter. In the end, we do know this: The archer who doesn’t take careful aim risks shooting his allies—or even shooting himself in the foot.”

Sandy Williams
Read more from Sandy WilliamsLatest in Trade Cases

Price on Trade: IEEPA tariffs head to the Supreme Court, DOJ ramps up trade enforcement
International trade law and policy remain a hot topic in Washington and beyond this week. We are paying special attention to the ongoing litigation of the president’s tariff policies and the administration’s efforts to heighten trade enforcement.

Mexico considers stiff tariffs for steel, autos, and other imports
Mexico is considering imposing steep tariffs on imports of steel, automobiles, and over 1,400 other products. Its target? Countries with which it does not have free trade agreements, mainly China, India, Thailand, and other South Asian nations.

Leibowitz: With ‘reciprocal’ tariffs struck down again in court, what happens next?
President Trump’s “reciprocal” tariffs under the International Emergency Economic Policy Act (IEEPA) were struck down again, this time on Aug. 29 by the Court of Appeals for the Federal Circuit (CAFC). The legal and policy mess continues, with the next stop being the US Supreme Court.

Market unfazed by US circuit court’s IEEPA decision
Repealing any reciprocal tariffs placed by President Donald Trump on US imports of direct reduced iron (DRI), iron ore, hot-briquetted iron (HBI), and pig iron would have only a nominal impact on the US steel market, market participants said.

ITC votes to keep HR duties after sunset review
The US government determined this week that hot-rolled steel imports from a handful of countries continue to threaten the domestic steel industry.