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DOC Launches Investigation on Titanium Sponge Imports for Possible Additional Tariffs

The United States has launched a probe under Section 232 of the Trade Expansion Act of 1962 to assess whether imports of titanium sponge threaten to impair U.S. national security. The initiation of this review, which stems from a petition filed on 27 September 2018 by a domestic producer of subject merchandise,  will not have an immediate impact on U.S. importers or foreign suppliers but could eventually lead to tariffs in the same way that the steel and aluminium investigations resulted in additional tariffs on products from all countries except those granted waivers by the U.S. government.

According to the U.S. Department of Commerce, titanium sponge is the primary form of titanium metal from which almost all other titanium products are made. Titanium is used in the production of strategic articles such as military aircraft (including helicopter blades and fighter jet airframes and engines), space vehicles, satellites, naval vessels, missiles and munitions. It is also widely used in critical infrastructure and commercial applications such as civilian aircraft, chemical plants, oil and gas plants, electric power and desalination plants, building structures, automobile products and bio-medical devices.

The DOC adds that imports account for more than 60 percent of U.S. titanium sponge consumption. Currently, only one facility in the United States has the capacity to process titanium ore into the sponge used in manufacturing. The DOC states that titanium sponge is difficult to stockpile for long periods as it degrades, rendering the sponge unsuitable for the most demanding military and aerospace applications.

Japan is by far the largest U.S. supplier of titanium sponge with a share of 93.4 percent of total imports or US$186.7 million during January-November 2018. Kazakhstan ranks second with a share of 6.3 percent or US$12.6 million, while Ukraine ranks a distant third with a share of 0.2 percent or US$0.3 million. Mainland China was the fourth largest U.S. supplier of this product during January-November 2018 at US$0.1 million, although its share of total U.S. imports stood at less than 0.1 percent.

It is worth mentioning that in August 2017 the United States launched separate antidumping and countervailing duty investigations on titanium sponge from Japan and Kazakhstan but the U.S. International Trade Commission ultimately determined that there was no reasonable indication that a U.S. industry was materially injured or threatened with material injury by reason of imports of subject merchandise. As a result, those AD and CV duty probes were terminated without the imposition of any measures.

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