United States tariffs on steel and aluminum could be constructive if the U.S. secures commitments from other steel-trading countries to eschew unfair trading practices and reduce overcapacity, according to a former acting deputy U.S. trade representative.
“Section 232” tariffs on steel and aluminum the United States will begin implementing March 23 could be constructive if the U.S. is able to secure commitments from other steel-trading countries to eschew unfair trading practices and reduce steel overcapacity, Wendy Cutler, managing director of the Asia Policy Institute’s Washington office said Tuesday at a Washington International Trade Association (WITA) event.
“If we could use this process to get serious and meaningful commitments from other steel…countries, to really focus and be committed to working on the China overcapacity problem with us, then I think there is a path forward,” said Cutler, who worked in the Office of the U.S. Trade Representative (USTR) from 1998 to 2015, most recently as acting deputy U.S. trade representative.
President Donald Trump proclaimed tariffs of 25 percent on steel and 10 percent on aluminum this past Thursday, after two separate reviews led by the Commerce Department found those imports to impair U.S. national security.
Section 232 of the Trade Expansion Act of 1962 allows the President to impose trade remedies if imports are found to threaten national security.
Trump cited a lack of multilateral engagement on reducing global steel overcapacity as one reason for ordering the tariffs, as the Organization for Economic Cooperation and Development-led Global Forum on Steel Excess Capacity, formed in September 2016, hasn’t made much progress in generating solutions to tackle the problem.
Some people feel that Trump’s tariffs don’t aim at the broad global overcapacity issue because Trump has made a lot of “sound and fury” about targeting U.S. trading partners outside of China, and most of the restraints incurred through the tariffs are being imposed on those countries, National Foreign Trade Council President Rufus Yerxa said during the WITA event.
“How does the administration find a way of targeting this more on the real source of the problem?” he said. “By the way, I don’t think I’d have this big industry alliance raising these concerns if [the Trump administration] devised a more targeted strategy.”
While there are over 150 U.S. antidumping and countervailing duty cases against steel from a “multitude” of countries, there are three AD/CV duty cases on aluminum – including on extrusions and foil – active against only one country, Aluminum Association CEO Heidi Brock said during the event.
“We will see how the market responds” to the “Section 232” aluminum tariff, but “for our industry, what we see is the price rises for everybody,” she said. “It’s a globally traded commodity, and ultimately, because China is being treated equally here, in fact, it probably just makes them more globally competitive, again, because the costs are rising for everybody.”
Anticipated price hikes could catalyze “some type of negotiation,” and perhaps bring China to the table, to address issues in the global aluminum market, but that remains uncertain, Brock said.
The Trump administration is offering product and country exclusions from the tariffs on a case-by-case basis, after Trump has already announced that Canada, Mexico and Australia will be exempt.
“We’re going to have a lot of visitors here between now and March 23,” Cutler said. “We’re going to see lots of ministers, lots of officials, and lots of stakeholders. I think there’ll be a lot of people who will be coming in and out of the USTR and Commerce [Department].”
Steel, aluminum tariffs could ignite multilateral talks
