From The Editor

Panel Throws Uncertainty On Section 232 Tariffs

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MCN Editor Dan Markham Ever since Joe Biden succeeded Donald Trump in January 2021, the new president has been unraveling many of the policies implemented by the previous administration. This is nothing new. When control of the White House shifts parties, as it did in the 2020 election, the incoming administration is expected to reverse some of the policies implemented by the outgoing group. 

But in the nearly two full years President Biden has been in office, there has been at least one area of emphasis of the former president that has remained in place, the Section 232 tariffs governing steel and aluminum. Enacted in 2018 by former President Trump, Section 232 imposed 25 percent levies on foreign steel and aluminum imported into the United States. Section 232 gives the president immense latitude to impose the fees if they’re done in the country’s national security interests. 

The tariffs and their effect on the global metals trade have not remained static in the four years since their implementation, under both administrations. Exclusions have been granted. South Korea negotiated a quota workaround and Europe followed suit with tariff rate quotas in the past year. 

But the tariffs themselves have persisted, with little threatening their existence. Until now. 

In December, a three-person World Trade Organization panel ruled against the tariffs, claiming they contravened global trading rules. Their ruling was in response to disputes filed by a disparate group of trading partners: Norway, China, Switzerland and Turkey.

U.S. steelmaking interests were quick to denounce the ruling. Kevin Dempsey, president of the American Iron and Steel Institute, said the WTO panel overstepped its bounds by treading on U.S. national security interests. Tom Conway, president of AISI’s occasional ally, the United Steelworkers International, offered a similar assessment. And Nucor President, Chairman and CEO Leon Topalian went a step further, calling for reform of “the broken system” of the WTO’s dispute process.

So where does that leave the metals supply chain? It’s not so obvious. U.S. Trade Representative Adam Hodge signaled the U.S. has no intention of lifting the tariffs in response to the ruling. 

“The WTO has proven ineffective at stopping severe and persistent non-market excess capacity from the PRC and others that is an existential threat to market-oriented steel and aluminum sectors and a threat to U.S. national security. The WTO now suggests that the United States too must stand idly by. The United States will not cede decision-making over its essential security to WTO panels,” Hodge expressed. 

It has been relatively calm over the past few years on the global metals trading front. But with the instability caused by the Russian invasion of Ukraine, supply chain issues, worldwide inflation and a potential softening of demand, it won’t be a surprise if 2023 is a lot more contentious.