Mike Kastner
NTEA Managing Director
mkastner@ntea.com
This article was published in the December 2021 edition of NTEA News.
The United States announced an agreement with European Union (EU) to eliminate tariffs on most steel and aluminum from EU and to put in place a quota system. The tariff elimination will become effective Jan. 1, 2022.
In March 2018, U.S. Department of Commerce recommended tariffs on steel and aluminum — 25% and 10%, respectively — imported into the U.S. for national security purposes.
What are tariffs?
A tariff is a tax on specified imported goods and paid by the importer. Tariffs can be levied under Section 301 or 232. Section 301 tariffs are recommended by the U.S. Trade Representative (USTR) based on a foreign nation’s unfair trade practices. Section 232 tariffs are based on recommendations from the Secretary of Commerce if imports are found to threaten U.S. national security interests.
U.S. steel and aluminum users can file requests for exclusions if the product they need is not available from U.S. producers. Tens of thousands of exclusion requests have been filed under the steel and aluminum tariffs.
EU deal
Steel
Beginning in 2022, the U.S. will replace the existing 25% tariff on EU steel products under Section 232 with a tariff-rate quota (TRQ). Under the TRQ arrangement, an historically-based volume of EU steel products will enter the U.S. market without any tariffs. The initial quota will be 3.3 million metric tons and calculated on a quarterly basis. Up to 4% of any unused quota in a quarter can roll over into the next quarter. Steel products with approved exclusions will not count against the quota.
Aluminum
The current 10% tariff on EU aluminum products will be replaced with a TRQ effective Jan. 1, 2022. Under the TRQ arrangement, historically-based volumes of EU aluminum products will enter the U.S. market without any tariff up to the quota limit. The aggregate annual import volume under the TRQ is set at 18,000 metric tons (TMT) for unwrought aluminum and 366 TMT for semi-finished (wrought) aluminum. The TRQ is calculated for each year of the measure and administered on a semi-annual basis, with no more than 60% to be filled in the first half of the year. The exclusion process will remain.
Global agreement
In conjunction with the deal on tariffs, the EU and U.S. agreed to negotiate a global arrangement to address carbon intensity and global overcapacity of high-carbon steel and aluminum. Taking joint steps to defend employees, industries and communities from global overcapacity and climate change, a new arrangement could discourage trade in high-carbon steel and aluminum that contributes to global excess capacity from other countries and ensure domestic policies support lowering the carbon intensity of these industries.
In a demonstration of renewed trust — and reflecting long-standing security and supply chain ties — the U.S. will not apply Section 232 duties and will allow duty-free importation steel and aluminum from the EU at a historical-based volume, and the EU will suspend related tariffs on U.S. products.
UK deal?
Since the UK left the EU (Brexit), trade agreements with the U.S. must be negotiated separately. Announced on the same day as the EU deals, according to Department of Commerce, “The United States and the United Kingdom are consulting closely on bilateral and multilateral issues related to steel and aluminum, with a focus on the impacts of overcapacity on the global steel and aluminum markets; the need for like-minded countries to take collective action to address the root causes of the problem; and the climate impacts of the sectors.
“Building on our shared democratic values, the United States and the UK are committed to working together to address contemporary economic challenges, while supporting their industries and workers. The United States and the UK look forward to market-orientation and tackling carbon emissions across all types of production in the steel and aluminum industry.
“The United States and the UK are each other’s biggest investors, with trade in goods and services between the United States and the UK worth over $250 billion in 2020. We are committed to enhancing that relationship yet further and plan to resume a range of talks on trade and economic issues.”
Future engagement
NTEA is an appointed member of ITAC 2. Industry Trade Advisory Committees (ITACs) offer advice and expertise to the Secretary of Commerce and United States Trade Representative (USTR) in formulating U.S. trade policy. ITAC 2 is the Automotive Equipment and Capital Goods ITAC. NTEA, in its ITAC capacity, will continue engaging with Department of Commerce and USTR as they negotiate further trade and tariff agreements affecting the work truck industry.
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