Trade Cases

U.S., UK Seek Swift Resolution to Rift Caused by Section 232 Tariffs

Written by Michael Cowden

Top U.S. and British trade negotiators appear to be nearing a deal to ease Section 232 tariffs on steel and aluminum from the United Kingdom.

That’s according to recent statements from the Office of the U.S. Trade Representative (USTR) and the Commerce Department.

steel tradeCase in point: Commerce Secretary Gina Raimondo and UK Secretary of State for International Trade Marie Trevelyan met on Wednesday, Dec. 8, and “discussed finding a path early in the new year for both governments to engage expeditiously in consultations on steel and aluminum.”

The goal: “combating global excess capacity” and “cooperation on trade in clean technology to support decarbonization efforts in both countries,” the department said.

That meeting came a day after USTR Katherine Tai and Secretary Trevelyan met to discuss the “special relationship” between the U.S. and the UK. Ambassaror Tai also emphasized Washington’s desire to work with “like-minded partners to address non-market excess capacity in the steel and aluminum sectors, ensure the industry’s long-term viability, and addressing the carbon intensity of steel and aluminum production.”

If that sounds familiar, that’s because it is. U.S. trade officials made similar statements ahead of and after reaching a deal with their EU counterparts to replace blanket Section 232 tariffs of 25% on steel with a tariff-rate quota, or TRQ.

The TRQ with the EU, which goes into effect on Jan. 1, allows a certain volume of steel, 3.67 million short tons, to come in from the EU free of Section 232 tariffs. The deal also specifies that steel must be melted and poured in the EU to qualify for exemption from the tariffs. That rules out material rolled from slab and billet made outside the EU, where presumably carbon emissions are higher. 

The U.S. has had similar talks with Japan and South Korea. The goal: to patch over relationships with traditional U.S. allies that had been damaged by Section 232 – which was justified on national security grounds and yet was applied equally to both allies and adversaries by the Trump administration.

Ambassador Tai and Secretary Raimondo said as much in an op-ed in the Pittsburgh Post-Gazette late last month: “The previous administration imposed steep tariffs on steel and aluminum not just from China, but from our allies and partners. These tariffs were a huge irritant for our allies and stood in the way of us working together to counter cheap steel being dumped into our markets.”

They also said easing Section 232 was necessary to fight inflation. Per the Post-Gazette op-ed: “Many Americans are experiencing the pinch of price increases – from the department store to the used car lot – due to COVID-19-related supply-chain disruptions. The steel industry was not immune to these effects either. Over the last 12 months, the cost of steel used by American manufacturers more than tripled. And those price increases were passed down to consumers from washing machines and houses to televisions and beer cans.”

Sheet prices have been falling fast in recent weeks: The hot-rolled coil price stood at $1,730 per ton earlier this week, down 11.5% from a 2021 peak of $1,955 per ton early in September. But that’s still nearly quadruple a 2020 low of $440 per ton, according to SMU’s interactive price tool.

The TRQ with the EU “will help drive down some of those price increases for American consumers, while protecting America’s industries and workers at the same time,” Tai and Raimondo said.

The UK, unlike the EU, is not a big steel supplier to the U.S. The UK shipped 190,240 metric tonnes to the U.S. in 2020, the last full year for which data is available. The bulk of that material, 86,841 tonnes, was flat-rolled steel. Pipe and tube, at 47,172 tonnes, was the next biggest product category, according to Commerce Department figures. Germany alone exported more than four times that amount, 810,218 metric tonnes, to the U.S. last year.

By Michael Cowden,

Michael Cowden

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