14 Aug 2018
U.S. Flexes Trade Muscle Against Turkey as High-Ranking Senate Lawmaker Voices Concern About Section 232 Product Exclusion Process
President Trump announced in a 10 August tweet that he has authorised the doubling of Section 232 tariffs on steel and aluminium from Turkey, citing the rapid depreciation of the Turkish lira and poor relations between the two countries. The tariffs on Turkish steel will jump from 25 percent to 50 percent effective 23 August but it is still uncertain when the higher tariffs on aluminium may enter into force. While this action does not directly impact Hong Kong or mainland Chinese exporters, it showcases the Trump administration’s willingness to play hardball on trade matters – even against historical allies – in an effort to get its way on priority issues.
Among other things, Washington believes Ankara should be co-operating more on certain trade and non-trade related issues, such as in securing the release of a U.S. pastor who has been under house arrest in Turkey. U.S. Secretary of Commerce Wilbur Ross issued a statement clarifying that “doubling the tariff on imports of steel from Turkey will further reduce these imports that the Department found threaten to impair national security as defined in Section 232.” However, press reports point out that Section 232 was not designed to function as a sanctions regime and the World Trade Organisation may not agree with the economic or strategic logic in this action.
Earlier this month, the Office of the U.S. Trade Representative launched a review of the eligibility of Turkey to participate in the Generalised System of Preferences based on concerns related to its compliance with the GSP market access criterion. The review is in response to Turkey’s imposition of additional tariffs on US$1.78 billion worth of U.S. imports, which came in retaliation for the United States’ additional tariffs on imports of steel and aluminium products. The United States is also pursuing other actions against Turkey but the U.S. Department of Defense has not weighed in on Turkish trade issues.
In other Section 232 news of potential interest, Sen. Ron Johnson (Republican-Wisconsin) sent a letter to Secretary Ross on 9 August with some very pointed questions about the process for excluding products from the Section 232 steel and aluminium tariffs. As chairman of the Senate Committee on Homeland Security and Governmental Affairs, Sen. Johnson decried the “uncertainty and arbitrary nature of the exclusion process.” While his letter focused on the difficulties that certain Wisconsin businesses are facing in obtaining much-needed product exclusions, he also noted that “across the country, many businesses share the same frustration about the difficult and time-consuming process.” The lawmaker asked Secretary Ross to provide detailed data on the process for review of exclusion requests, including how the decisions are made and by whom.
Sen. Johnson had previously commented on the plan to set aside US$12 billion to compensate farmers for the harm caused by retaliatory tariffs. “This is becoming more and more like a Soviet type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits,” he complained.