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Steel & Aluminum Tariff Update: Levies on Turkey Doubled While US-EU Tensions Cool


  • On August 14th, Canada launched its own safeguard investigation into steel imports; the outlook for a resolution to NAFTA remains unclear
  • On August 10th, US President Donald Trump doubled levies on steel and aluminum imports from Turkey, setting a precedent that could double the tariffs to nine other countries as well
  • On July 25th, Trump spoke with EU Commission Chief Jean-Claude Juncker, initiating discussions that could lead to rolling back tariffs and cool trade tensions
  • On July 18th, the EU implemented steel safeguard tariffs without regard for export country


       On August 10th, President Trump announced that the US would double existing steel and aluminum tariffs on Turkey, the world’s 8th largest steel producer, bringing levies to 50% on steel and 20% on aluminum.  While Turkey’s aluminum exports to the US are negligible, in 2017 it was the 6th largest importer of steel into the US, supplying a substantial volume of rebar, pipe for pilings and cold-rolled sheet.  The president’s announcement came via Twitter and was later confirmed by the US Secretary of Commerce Wilbur Ross, although it was not specified when these measures would take effect.  Trump’s actions, while ostensibly due to the decline in the Turkish Lira, appear to be at least in part politically motivated.  Furthermore, trade and industry sources warn that nine other countries, including heavyweights China, Russia, India and Vietnam, may also be at risk for increased tariffs based on Turkey’s precedent.  The nine countries accounted for 6.1 MMT or 17.6% of US steel imports last year.


       On July 18th, the European Commission announced provisional safeguard measures for imports of 23 steel product categories.  The Safeguard Investigation and resulting safeguard tariffs are intended to protect the European steel market from an influx of cheap imports that are being diverted away from the US market.  These safeguard measures came into effect the day after their announcement, placing a 25% duty on all imported volume that exceeds the average of import volumes over the past three years for each product category.  The tariffs will be applied on a first-come first-served basis, without regard for the exporting country.  The safeguard tariffs will only remain in effect temporarily, with a maximum term of 200 days before the European Commission must conclude its Safeguard Investigation, launched in late March, and announce a permanent response.


       Despite the EU safeguard announcement in mid-July, it appears that the trade war between the US and EU may have reached an inflection point following the July 25th meeting between US President Donald Trump and Chief of the European Commission Jean-Claude Juncker.  Although they omitted specific details, the two leaders promised to work to de-escalate the existing trade situation, reducing barriers incrementally and aiming for zero tariffs on non-auto, industrial goods.  As a first step, the two agreed not to levy further tariffs on each other as they continue to discuss paths toward de-escalation.


       On August 14th, Canada announced its own safeguard investigation into the effects of trade diversion on the domestic market resulting from US 232 tariffs.  The investigation, which could yield similar measures to those enacted by the EU in July, is set to last 15 days and will cover seven steel categories: plate, rebar, OCTG, hot-rolled sheet, pre-painted steel, stainless steel wire and wire rod.


       While Trump has indicated that Canada and Mexico will continue to be subject to the US Section 232 Tariffs on steel and aluminum until progress has been made on NAFTA discussions, South Korea, Brazil, Argentina and Australia have all secured agreements with some form of permanent exemption for one or both products.  South Korea and Brazil have agreed to steel export quotas at 70% of their previous 3 year average volumes, while Argentina has secured a quota of 135% of its 3 year average steel export volume and 100% of its 3 year average aluminum export volume.  Only Australia remains exempt from steel and aluminum tariffs without any export quota agreement in place.


Donald Bly

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