Trade Cases

December Reported as Demise of Section 232 Tariffs on EU

Written by Sandy Williams

A deadline has been set by the European Union and the U.S. to end Section 232 steel and aluminum tariffs, and any retaliatory measures, by Dec. 1, according to a draft communiqué obtained by Reuters. An announcement of the agreement is expected at the G7 Summit next week in Brussels.

steel trade“We commit to work towards lifting before 1 December 2021 all additional/punitive tariffs on both sides linked to our steel and aluminum dispute,” the draft said.

The communiqué also includes a commitment to ending the dispute regarding subsidies to aircraft companies, Boeing and Airbus, by July 11. The tiff about subsidies resulted in former President Trump imposing tariffs on $7.6 billion of European Union products and the EU retaliating on $4 billion of U.S. products.

The 10% aluminum and 25% steel tariffs were imposed in 2018 by the Trump administration under the premise of protecting national security. Lifting of the tariffs will be welcomed by manufacturers in the U.S. who say the tariffs have been a burden that has inflated prices and caused supply disruptions. Section 232 tariffs are still strongly supported by the steel industry.

The Coalition of American Metal Manufacturers and Users sent a letter to President Biden as he heads to Europe to discuss trade issues. The letter, signed by 33 trade associations, calls for the immediate removal of the Section 232 tariffs. Last month the coalition sent a separate letter from over 300 manufacturers asking the Biden administration to put an end to the tariffs.

“The restriction on the supply of goods and raw materials resulting from the tariffs has sent a ripple throughout downstream industries, disrupting supply chains and threatening the economic security of American workers. Our members rely on the movement of their goods and inputs without constant government intervention that causes delivery delays and arbitrary price spikes,” said the group in the June 9 letter.

“Our businesses sustain communities and create jobs across the country that far outweigh any perceived benefit of the Section 232 steel and aluminum tariffs on two industries. To grow U.S. jobs, we urge you to lift the steel and aluminum tariffs, negotiate the removal of retaliatory tariffs on American exports, and support innovative policies to make our businesses more globally competitive.”

Opponents to Section 232 measures have said that placing tariffs on materials from our allies diminishes America’s standing as a trade leader. There also is increasing concern that a potential infrastructure bill may be hindered by a shortage of steel and other supplies, such as lumber, that have been restricted by the use of tariffs.

Removing the 232 tariffs and allowing steel imports to resume from Europe may not be the surge that some expect, said Bank of America analyst Timna Tanners during an SMU Community Chat webinar on Wednesday. Europe is generally a balanced market that sends steel products to the U.S. that aren’t widely produced domestically. And it the EU implements a carbon border tax, even more steel will stay in Europe, she said.

And lifting the tariffs has political support in some corners. U.S. Senator Pat Toomey (R, Pa.) reacted favorably to the notion of ending the tariffs. Said Toomey in a statement:

“In the two years preceding the pandemic, the United States lost over 75,000 manufacturing jobs due to the Commerce Department’s taxes on imported steel and aluminum. Reports that the Biden administration is ending these taxes on imports from the EU is encouraging. If true, the Biden administration must not waiver, in fact, it should be working to remove these destructive taxes on our other allies also. This pending action does not change the fact that Congress should work to rein in executive authority to unilaterally impose ‘national security’ taxes.”

On the other side of the issue are groups such as the progressive-leaning Economic Policy Institute, which said that the 10% tariffs on aluminum have created jobs and investment with negligible impact on consumers of aluminum products. The United Steelworkers and American Primary Aluminum Association concur with the findings.

“The Section 232 program is allowing the American primary aluminum industry to regain its strength against global overproduction while creating thousands of good-paying direct and indirect aluminum jobs,” said Jesse Gary, chairman of the American Primary Aluminum Association. “This study highlights the incredible impact the Section 232 tariff program has had on our industry that is essential for our country’s national defense and our nation’s future. If we want to Build Back Better, support American workers, and protect this critical industry, we must keep the Section 232 program in place.”

President Biden is focusing on repairing relationships with allies that were damaged during the Trump administration. Part of that strategy is to realign the EU and other allies in a cooperative effort to establish policies promoting free trade, containing China and excess steel capacity, addressing climate change, and ending the COVID-19 pandemic.

Depending on your point of view, Section 232 either did its job or caused disruption. What is clear is that all things must come to an end. The Steel Manufactures Association, which represents EAF manufacturers, has strongly supported the tariffs. But as SMA President Philip Bell said in a SMU Community Chat webinar in late May, “all tariffs have a shelf life.”

By Sandy Williams,

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