The aluminum producers of Canada, Mexico and the U.S. have written their leaders -- as well as Mexico's president-elect -- asking that tariffs on aluminum be lifted, without quotas, before Nov. 30. "The USMCA cannot work for the aluminum industry or our many downstream customers without exempting Canada and Mexico from the [Section] 232 tariffs or quotas," the three trade groups wrote in a Nov. 5 letter. They suggested that unnaturally cheap Chinese aluminum cannot come into the U.S. through a free-trade backdoor. "Canada recently moved to align its country of origin marking regime for steel and aluminum products to prevent transshipment and diversion of aluminum and steel. Mexico has initiated an anti-dumping case on aluminum foil imports from China," the letter said, so the tariffs in the region are no longer needed. The U.S. aluminum trade group never supported aluminum tariffs on allies.
Section 232 Tariffs
The United States currently maintains a 25% tariff on steel imports and 10% on tariff on aluminum imports under Section 232 of the Trade Expansion Act of 1962. In 2018, the Trump administration imposed Section 232 Tariffs on steel and aluminum imports into the United States, citing national security concerns. The U.S. agreed to lift tariffs on Canada and Mexico after the signing of the United States-Mexico-Canada Agreement (USMCA), and reached deals with the European Union, Japan and other countries to replace the tariffs with quotas for steel and aluminum imports into the U.S.
Because less than a quarter of vehicles sold in the U.S. are assembled outside the NAFTA region, if 25 percent tariffs are levied on auto parts, the impact would be uneven across the auto industry. Mexico parts production -- with substantial room to grow -- is shielded from future tariffs as part of a tariff rate quota system outlined in the new NAFTA. Still, the National Automobile Dealers Association believes the hit to auto sales would be swift and severe. Patrick Mazzi, a senior economist for NADA, talked about the impact of the administration's trade policy at the National Economists Club Nov. 1.
No business or labor group came out against the U.S.-Mexico-Canada Agreement, in comments filed to the International Trade Commission, even as some groups expressed concerns about aspects of the deal to replace NAFTA. Comments are due before the ITC holds a hearing on Nov. 15.
The trade group suing the Trump administration over Section 232 tariffs on steel has made another fundraising appeal to help pay its lawyers. The American Institute for International Steel also sent out a similar letter in July (see 1807200023). The case is scheduled for oral argument in the Court of International Trade on Dec. 19. "We are in need of $90-100,000 more in the next two weeks if we are going to maintain the stride and pace that has taken us to this important point," the trade group wrote. Members that have not contributed should "take a moment to calculate what the Section 232 tariffs are costing your business," AIIS Chairman John Foster said. "As an example, of the two port members we spoke with just last week, one is down 50 steel ships this year, while the other is off 30 year on year. These two ports by themselves support a large number of import steel and aluminum related-livelihoods."
The U.S. blocked requests from China, Canada, Mexico, Norway, Russia, Turkey and the European Union to examine the legality of steel and aluminum tariffs at the World Trade Organization on Oct. 29. Panel requests can only be blocked one time, so at the next meeting, the panels will be formed. The U.S. was also seeking panels on retaliatory tariffs from China, Canada, Mexico and the EU, and those were blocked.
Lifting the steel and aluminum tariffs on Mexico and Canada before the NAFTA replacement is signed at the end of November would be a good idea, Sen. Rob Portman, R-Ohio, told reporters Oct. 23. Portman was one of a handful of senators at a meeting with U.S. Trade Representative Robert Lighthizer a little more than a week ago, and he said Lighthizer did not say that was his goal.
PALM SPRINGS, Calif. -- Piecemeal bond increases to satisfy CBP insufficiency notices won’t be enough to dig importers out of the hole created by recently imposed sections 232 and 301 tariffs on aluminum and steel and products from China, respectively, said Dave Jordan of Roanoke Trade on Oct. 20. While CBP looks at duties paid over the past 12 months to set bond requirements, importers have likely seen their duty liability spike in the past few months since the tariffs were imposed, and will “probably end up with an insufficiency letter again in a few months” as more time passes with the tariffs in effect, he said, speaking at the Western Cargo Conference. Importers should do their own calculations, taking the month with the highest amount of duties paid, multiplying that by 12 months and setting a bond at 10 percent of that amount. For example, an importer that averaged $500,000 in duties paid over the last two months should extrapolate that to $6 million over the year and get a bond for $600,000. Some importers' products covered by multiple trade remedies could see bond requirements rise substantially, Jordan said. One of his clients, an importer of solar panels subject to Section 201 safeguards and Section 301 tariffs, started with an $800,000 bond that’s now up to $11 million, he said. CBP has urged importers to be “proactive” in setting their bond amounts (see 1808210029), given the recent spike in insufficiency notices (see 1807260011).
The World Trade Organization's Dispute Settlement Body committee, which will meet Oct. 29, will consider multiple requests for panels on the legality of the U.S. steel and aluminum tariffs, and on the legality of the safeguard tariffs that others imposed in reaction to the Section 232 action. The U.S. notified the WTO that its consultations with the European Union, Mexico, China and Canada on their safeguards were unsuccessful, and it asks for a panel in each of those matters. Canada, Mexico, Norway, Russia, the EU and China all asked for a panel on the metals tariffs.
PALM SPRINGS, Calif. -- A recent change to ACE processing of absolute quota entries marks a “big improvement,” especially for West Coast importers, said Pauline Hogue, program manager-trade at CBP’s Los Angeles Field Office, at the Western Cargo Conference on Oct. 19. A switch from daily batch processing to hourly processing (see 1809180015) means quota entries are processed throughout the day, and any cargo that arrived after 4:30 p.m. Pacific time will no longer have to sit until the next batch is processed the following evening Eastern time. Now such shipments will be processed at 9:45 a.m. Pacific time the following morning. The change came as part of the deployment in ACE of absolute quota functionality, which hadn’t been initially included because absolute quotas hadn’t existed for almost a decade until they were imposed as part of country-specific deals to end Section 232 tariffs on steel and aluminum.
The Philippines Secretary of Trade and Industry Ramon Lopez and U.S. Trade Representative Robert Lighthizer issued a joint statement Oct. 22 describing "achievements resolving bilateral trade issues" between the two countries. The Philippines and U.S. have agreed to cooperate on automotive standards for imported autos; the Philippines has agreed to not discriminate against foreign electronics payments providers; and the U.S. will help the Philippines develop stronger cold chain practices, so it can export food that needs to be kept cold.