Steel and Aluminum Tariffs

Monday, March 12, 2018
Categories: News, Tariffs

UPDATED APRIL 8, 2018

Steel and Aluminum Tariffs
Interim Final Rule
Setting forth Requirements for Requests for Exclusions And Objections thereto

In two separate Presidential Proclamations dated March 8, 2018, President Trump fulfilled his promise to impose tariffs on imports of steel and aluminum (imports from Canada and Mexico were temporarily exempted pending the NAFTA negotiations).  On March 22, 2018, President Trump signed two additional Presidential Proclamations temporarily exempting until May 1, 2018 certain countries (i.e., Canada, Mexico, Australia, Argentina, South Korea, Brazil and European Union member countries). On March 23, 2018, South Korea and the U.S. agreed in principle to a number of changes to the Korea-U.S. Free Trade Agreement (KORUS), including an agreement by South Korea to a product-specific quota equivalent to 70% of its average annual steel export volume to the U.S. from 2015 through 2017.

Thus, a 25% ad valorem duty will apply to covered imports of steel and a 10% ad valorem duty will apply to covered imports of aluminum from non-exempted countries. Tariffs will apply with respect to (a) non-exempted goods entered or withdrawn from warehouse for consumption on or after 12:01 a.m. eastern daylight time on March 23, 2018, and (b) all goods on or after 12:01 a.m. eastern daylight time on May 1, 2018. Adjustments to tariffs might be made to non-exempt countries as countries are exempted on a long-term basis

Steel train tracks

Exclusions

The President also provided for country and product-specific exclusions, as follows:

  • Country: “Any country with which we have a security relationship is welcome to discuss with the United States alternative ways to address the threatened impairment of the national security caused by imports from that country.  Should the United States and any such country arrive at a satisfactory alternative means to address the threat to the national security such that I determine that imports from that country no longer threaten to impair the national security, I may remove or modify the restriction on steel articles imports from that country and, if necessary, make any corresponding adjustments to the tariff as it applies to other countries as our national security interests require.”
  • Product-specific: Upon petition/ request of an a “directly affected party located in the United States,” a product may be excluded or provided relief from coverage if the article is determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality or is necessary for national security. March 22, 2018 Presidential Proclamation supplements original Presidential Proclamation “Such relief may be provided to directly affected parties on a party-by-party basis taking into account the regional availability of particular articles, the ability to transport articles within the United States, and any other factors as the Secretary deems appropriate.” In testifying before the House Ways & Means Committee on March 22, 2018, Secretary Ross stated: “[i]n order to not grant an exclusion, we will be looking for demonstrated manufacturing capability meeting the technical parameters for the specific article in question.” “This could include idled capacity that is being brought back online as a committed thing — not as a prospect, not as a possibility — but as a commitment by the U.S. company as well as [one that] will include new, expanded capabilities.”

Process for seeking product-specific exclusions set forth in Interim Final Rule

  • The Secretary of Commerce was directed to issue procedures for filing requests for product-specific exclusions within 10 days of the issuance of the Proclamations, which were both issued on March 8, 2018.
  • In an interim final rule to be published in the Federal Register March 19, 2018, the Bureau of Industry and Security, U.S. Department of Commerce sets forth the process for submitting requests for product-specific exclusions and for filing objections to requests for such exclusions. While the interim final rule becomes effective immediately upon publication in the Federal Register, comments on the interim final rule may be submitted within 60 days of publication.
  • Who can file a request for exclusion: Only individuals or organizations using steel and aluminum articles in business activities (e.g., construction, manufacturing, or supplying steel/ aluminum to users) in the United States may submit exclusion requests.
  • Exclusions: Approved exclusions will be made on a product basis and will be limited to the individual or organization that submitted the specific exclusion request, unless Commerce approves a broader application of the product-based exclusion request to apply to additional importers. March 22, 2018 Presidential Proclamation states “For merchandise entered on or after the date the directly affected party submitted a request for exclusion, such relief shall be retroactive to the date the request for exclusion was posted for public comment.”
  • Follow-on requests: Other individuals or organizations that wish to submit an exclusion request for a steel or aluminum product already approved for exclusion may submit an exclusion request. Such follow-on requesters of exclusion requests are not required to reference a previously approved exclusion, but Commerce may take that into account when reviewing a subsequent exclusion request. Follow-on requests may be submitted even if a prior request for the same product had been denied. The prior request may have been inadequate to demonstrate the criteria for exclusion. Thus, it is important for the follow-on requester to be sure to submit additional information meeting the criteria.
  • Public disclosure: Requests will be subject to public disclosure. Requesters should not provide personally identifiable information, including social security number and employer identification numbers. Information that is subject to government-imposed access and dissemination or other specific national security controls, e.g., classified information or information that has U.S. Government restrictions on dissemination to non-U.S. citizens or other categories of persons that would prohibit public disclosure of the information, should not be included in exclusion requests or objections to submitted exclusion requests. Individuals and organizations that have proprietary or otherwise business confidential information that they believe relevant to the Secretary’s consideration of the submitted exclusion request or objections to submitted exclusion requests should so indicate in the appropriate field of the relevant form.
  • Required forms: For steel, BIS has posted two separate fillable forms on the BIS website at https://www.bis.doc.gov/index.php/232-steel and on the Federal rulemaking portal (http://www.regulations.gov) that are to be used by organizations for submitting exclusion requests, and objections to exclusion requests. On regulations.gov, one can find the two forms by searching for its regulations.gov docket number, which is BIS2018-0006. For aluminum, BIS has posted two separate fillable forms on the BIS website at https://www.bis.doc.gov/index.php/232-aluminum and on the Federal rulemaking portal (http://www.regulations.gov) that are to be used by organizations for submitting exclusion requests, and objections to exclusion requests described in this supplement. On regulations.gov, one can find the two forms by searching for its regulations.gov docket number, which is BIS2018-0002.
  • Identification of exclusion requests: The file name of the submission must include the submitter’s name, date of submission, and the 10-digit Harmonized Tariff Schedule of the United States (HTSUS) statistical reporting number.
  • Where to file: All exclusion requests must be in electronic form and submitted to the Federal rulemaking portal (http://www.regulations.gov). For steel, one should reference the docket number BIS-2018-0006. For aluminum, one should reference the docket number BIS-2018-0002.
  • No time limit for filing requests for exclusions
  • Substance: An exclusion request must specify the business activities in the United States within which the requester is engaged that authorize the individual or organization to submit an exclusion request. The request should clearly identify, and provide support for, the basis upon which the exclusion is sought. An exclusion will only be granted if an article is not produced in the United States in a sufficient and reasonably available amount, is not produced in the United States in a satisfactory quality, or for a specific national security consideration.
  • Objections: Any individual or organization in the United States may file objections to exclusion requests, but the Commerce Department will only consider information directly related to the submitted exclusion request that is the subject of the objection. When submitting an objection to a submitted exclusion request, the objector must locate the exclusion request and submit a comment on the submitted exclusion request in regulations.gov. The file name of the objection submission should include the objector’s name, date of submission of the objection, name of the organization that submitted the exclusion request, and date the exclusion request was posted. Objections must be filed no later than 30 days after the related exclusion request is posted.
  • Relationship between country-based exemptions and product-based exclusions and objection process: The process for exclusions and objections is separate and apart from the process by which countries may seek exemptions from the duties imposed by the President. The criteria for exclusions are primarily focused on the availability of the product in the United States. The Secretary will consider information about supply in other countries to the extent relevant to determining whether specific national security considerations warrant an exclusion. Commenters on this interim final rule may submit comments regarding how and whether or not the country of origin of a proposed product should be considered by Commerce as part of the process for reviewing product-based exclusion requests.

Effective date: Applies to all non-exempted goods entered, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on March 23, 2018, and shall continue in effect, unless such actions are expressly reduced, modified, or terminated. Applies to all goods entered, or withdrawn from warehouse for consumption on or after 12:01 a.m. eastern daylight time on May 1, 2018.

Products covered (as described in original March 8, 2018 Presidential Proclamations; see March 22 Presidential Proclamations for revisions/ corrections)

  • Steel: “steel articles” are defined at the Harmonized Tariff Schedule (HTS) 6‑digit level as:  7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90, including any subsequent revisions to these HTS classifications. The covered products will be listed in an Annex in Subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS).
  • Aluminum: “aluminum articles” are defined in the Harmonized Tariff Schedule (HTS) as: (a) unwrought aluminum (HTS 7601); (b) aluminum bars, rods, and profiles (HTS 7604); (c) aluminum wire (HTS 7605); (d) aluminum plate, sheet, strip, and foil (flat rolled products) (HTS 7606 and 7607); (e) aluminum tubes and pipes and tube and pipe fitting (HTS 7608 and 7609); and (f) aluminum castings and forgings (HTS 7616.99.51.60 and 7616.99.51.70), including any subsequent revisions to these HTS classifications.

Temporary Country Exemptions until May 1, 2018 (as of March 22, 2018)

  • Canada, Mexico, Australia, Argentina, South Korea, Brazil and European Union member countries
  • Other countries may be forthcoming

Foreign Trade Zones (FTZ)

  • “Products admitted into a FTZ may only be admitted as “privileged foreign status” (i.e., as imported into the zone) as defined in 19 CFR 146.41, and will be subject upon entry for consumption to any ad valorem rates of duty related to the classification under the applicable HTSUS subheading. Any steel article that was admitted into a U.S. foreign trade zone under “privileged foreign status” as defined in 19 CFR 146.41, prior to 12:01 a.m. eastern daylight time on March 23, 2018, will likewise be subject upon entry for consumption to any ad valorem rates of duty related to the classification under applicable HTSUS subheadings imposed by Proclamation 9705, as amended by this proclamation”

Quotas

  • Possible implementation of quotas on exempt countries if deemed necessary to combat transshipment, excess production, or other actions leading to increased exports. Quotas to be determined taking into account imports of steel and aluminum since January 1, 2018

 Resources:

Questions: Given the fluid situation as to coverage and exclusions, you may have questions regarding the announced steel and aluminum tariffs.  Should you have any questions, please contact Evelyn Suarez at esuarez@suarezfirm.com or 202.552.0310.

Evelyn Suarez:  Ms. Suarez is an experienced international trade lawyer with a special focus on import and export compliance and regulation, as well as on anti-corruption and trade policy issues. Her practice includes administrative, regulatory, legislative and litigation matters for global companies that are involved in importing, exporting, transportation, logistics and customs brokerage. She is an immediate past president of the Association of Women in International Trade (WIIT) and serves on various boards in addition to WIIT:  Virginia Maritime Association, the George Washington University Center for International Business Education & Research and Old Dominion Maritime, Port and Logistics Management Institute. She is a frequent lecturer and thought leader on customs and international trade matters.