Trade Cases

Pentagon Backs Limited Action on Section 232
Written by Sandy Williams
February 24, 2018
Ironically, the Department of Defense is among the least enthusiastic about the Section 232 investigations into the impact of steel and aluminum imports on national security. After reviewing a draft of the Section 232 report last year, the DoD determined that trade restrictions proposed by Commerce Secretary Wilbur Ross would “unnecessarily vex U.S. allies.”
The Pentagon reiterated that stance in a memo to Commerce released this week. “DoD continues to be concerned about the negative impact on our key allies regarding the recommended options with the (Section 232) reports,” the Department wrote.
Although, the Pentagon “believes that the systematic use of unfair trade practices to intentionally erode our innovation and manufacturing industrial base poses a risk to our national security,” the memo notes that supporting U.S. military requirements requires only 3 percent of U.S. aluminum and steel production.
“Therefore, DoD does not believe that the findings in the reports impact the ability of DoD programs to acquire the steel or aluminum necessary to meet national defense requirements.”
The Department adds, “However, DoD recognizes that among these reports’ alternatives, targeted tariffs are more preferable than a global quota or tariff.”
The DoD suggests that an interagency group refine the targeted tariffs “so as to create incentives for trade partners to work with the U.S. on addressing the underlying issue of Chinese transshipment.”
If tariffs or quotas are imposed, they should be conditional, said DoD. If action is taken on steel imports, action on aluminum imports should be delayed. “The prospect of trade action on aluminum may be sufficient to coerce improved behavior of bad actors.”
The memo concludes: “This is an opportunity to set clear expectations domestically regarding competitiveness and rebuild economic strength at home while preserving a fair and reciprocal international economic system as outlined in the National Security Strategy. It is critical that we reinforce to our key allies that these actions are focused on correcting Chinese overproduction and countering their attempts to circumvent existing antidumping tariffs – not the bilateral U.S. relationship.”

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.