Trade Cases

It's Official Now: U.S.-UK Reach Deal to Ease Section 232 Tariffs

Written by Michael Cowden

The United States and the United Kingdom have agreed to a deal to ease Section 232 tariffs on steel and aluminum.

The contours of the agreement match what Steel Market Update reported earlier in the day on Tuesday, March 22.

hand shake

“Today’s historic deal is a testament to that ambitious goal and will benefit America’s steel and aluminum industries and workers by protecting manufacturing, as well as consumers, by easing inflationary pressures in the U.S.,” Commerce Secretary Gina M. Raimondo said in a statement.

The agreement also removes retaliatory measures that had been imposed on U.S. exports in response to the rollout of the controversial Trump-era tariffs in 2018.

The pact, as SMU previously reported, will go into effect on June 1, 2022. A link to the details is here. The U.S. will re-evaluate those details every three months starting no later than Sept. 1, 2022.

The centerpiece of the pact is a tariff-rate quota, or TRQ, that allows for a specified amount of steel to be imported into the U.S. from the UK free of Section 232 tariffs of 25% in the case of steel. In that regard, it is broadly similar to TRQ deals already negotiated with Japan and the European Union.

The quota threshold, as SMU also reported earlier on Tuesday, is 500,000 metric tonnes. That amount is based on import volumes in 2018-19. It will be divvied up into the 54 products categories that were used to administer TRQ agreements previously reached between the U.S, the EU and Japan.

The deal with the UK in addition features “melted and poured” language, meaning that steel must be made in the UK to qualify for tariff-free treatment.

One new wrinkle – also previously reported by SMU – is that 37,800 tonnes of steel melted and poured in the UK can be exported to the EU for further processing. Those tons will be considered of EU origin and will also be eligible for duty-free treatment.

Another aspect of the agreement is that the pact will see customs cooperation between the U.S. and the UK. Both parties will work together to root out fraud as well as duty evasion or circumvention.

Case in point (and as SMU reported earlier on Tuesday): The U.S. and the UK in a joint statement specifically called out any UK steel producer that is owned or controlled by a company registered in China or by a Chinese entity.

Any such company that exports steel to the U.S. must attest that it is not receiving any subsidies from China. It must also attest that it is not engaging in “market distorting practices” that would “materially contribute” to “non-market excess capacity of steel.”

An independent audit will be conducted to make such determinations. And steel from a Chinese-controlled UK steel producer will be subject to tariffs if it is found to be in violation of those terms.

By Michael Cowden,

Michael Cowden

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