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Trump Administration Eyes Import Restrictions on Steel and Aluminium Imports

The U.S. Department of Commerce has self-initiated separate investigations under section 232 of the Trade Expansion Act of 1962 to determine whether increasing imports of foreign-made steel and aluminium threaten U.S. economic security and military preparedness. These investigations could result in the imposition of tariffs, quotas or other restrictions on a wide range of imported steel and aluminium products in as little as a few months.

Section 232 investigations include consideration of factors such as the amount of domestic production needed for projected national defence requirements and whether imports impair the domestic industry’s ability to meet those needs, the effect of foreign competition on the domestic industry, and any detrimental impacts from the displacement of domestic products by excessive imports. The DOC said its investigations will specifically examine global overcapacity, dumping and illegal subsidies, as well as various other factors, to determine whether steel and/or aluminium imports threaten American economic security and military preparedness. Under the law the DOC has up to 270 days to conclude a section 232 investigation and submit its report and recommendations to the president. However, in separate memoranda issued on 20 April and 27 April President Trump directed the DOC to “proceed expeditiously” in conducting these investigations.

If the DOC concludes that steel and/or aluminium are being imported in such quantities or under such circumstances as to threaten to impair U.S. national security, and the president concurs (a decision he has up to 90 days to make), the president has broad authority to adjust imports of steel and/or aluminium and their derivatives, including through the use of tariffs and quotas. Any import adjustments, or any other non-trade-related actions the president may elect to take, would be imposed within 15 days of the president’s determination to act.

A DOC fact sheet explains that “a robust and healthy domestic steel production industry is necessary for national security,” including the production of armour, ships, and aircraft, which could be accelerated under the Trump administration’s planned military build-up. However, the fact sheet adds, U.S. steelmakers have “struggled in recent years, raising concerns about the industry’s ability to support national security needs.” The investigation will therefore consider production and capacity, workforce, investment, research and development, and other factors to determine whether steel is being imported in such quantities or under such circumstances as to threaten or impair U.S. national security.

The DOC adds that the United States is relatively unusual in that it has no tariffs on steel but has had to impose antidumping or countervailing duty orders in over 150 cases, with 13 additional cases currently pending. The U.S. military often needs specialty steel alloys that require unusual production skills. As a result, the DOC states that a robust and healthy domestic steel production industry may be deemed necessary to guarantee military supply chains in the event of conflict.

As regards aluminium, a separate DOC fact sheet states that U.S. aluminium imports grew by 18 percent last year while domestic production declined by 47 percent. Of the eight aluminium smelters based in the United States at the beginning of 2016, seven have either shut down, reduced production or are idle. U.S. imports of mainland Chinese aluminium have grown briskly in recent years, including a 183 percent jump in imports of semi-fabricated aluminium during 2012-2015 as well as an increase from zero in 2004 to 22 percent currently in the share of the U.S. market held by imports of mainland Chinese aluminium foil.

The domestic aluminium industry is pursuing various tactics aimed at combatting a range of unfair trade practices that are allegedly being pursued by mainland Chinese aluminium producers and exporters. For example, the industry is a strong supporter of the dispute settlement case launched by the United States at the WTO on 12 January 2017 involving allegations that Beijing provides illegal subsidies to certain producers of primary aluminium. The United States contends that mainland China ostensibly provides such subsidies through artificially cheap loans from banks as well as artificially low-priced inputs for aluminium production, such as coal, electricity and alumina. The United States argues that these subsidies have led to a chronic state of overcapacity that has in turn resulted in price-related and other harmful effects on a global basis. The industry also supports the on-going AD and CV investigations of mainland Chinese aluminium foil made from an aluminium alloy that contains between 92 and 99 percent aluminium.

Meanwhile, United Steelworkers, the largest industrial labour union in North America, is urging the Committee on Foreign Investment in the United States to reject the proposed acquisition of U.S. aluminium manufacturer Aleris Corporation by Zhongwang USA, a subsidiary of the mainland China-based Zhongwang International Group. The labour union stated in an 8 May letter to Treasury Secretary Steven Mnuchin that this transaction was recently withdrawn and then refiled to gain more time for CFIUS to review it. United Steelworkers contends, among other things, that if CFIUS approves the transaction mainland Chinese interests would acquire greater control over the aluminium industry and enhance their access to key technologies.

Content provided by Picture: HKTDC Research
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