AFS Trade Webinar: Update on Section 232 Steel & Aluminum Tariffs and Retaliation Measures Presented by Teresa Polino, Partner , Arent Fox Aman Kakar, Associate , Arent Fox 202.350.3745 202.350.3632 teresa.polino@arentfox.com aman.kakar@arentfox.com ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Agenda Section 232 Tariffs on Steel and Aluminum Retaliation from Trading Partners Section 301 Tariffs on China China’s Retaliation for Section 301 Tariffs Enforcement Options 2 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Section 232: National Security Actions Background: What are they? On March 8, President Trump issued Presidential Proclamations imposing a 25 percent ad valorem tariff on certain steel articles and a 10 percent ad valorem tariff on certain aluminum articles. The Proclamations were issued pursuant to Section 232 of the Trade Expansion Act of 1962. In Section 232 proceedings, the Department of Commerce issues a report to the President’ with investigation findings on whether certain imports threaten to impair America’s national security. Once the DOC issues the report, the President has wide latitude to take actions to curb imports. 3 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Section 232: National Security Actions Background: What are they? In Section 232 investigations, the DOC must consider the following factors: domestic production needed for projected national defense requirements capacity of domestic industries to meet such requirements availability of the human resources, products, raw materials, and other supplies and services essential to the national defense the requirements of growth of such industries and such supplies and services the impact of foreign competition on the economic welfare of individual domestic industries ; and any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports 4 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Section 232: Country Exemptions Initially, the U.S. exempted Australia, Argentina, Brazil, Canada, EU, Mexico and South Korea from the 232 tariffs on covered steel and aluminum imports. However, on March 31, 2018, the President issued a proclamation applying the Section 232 tariffs to Canada, Mexico and EU. As of June 1, 2018, Steel Section 232 tariffs are applied to all countries except Argentina, Australia, Brazil and South Korea. Argentina, Brazil and South Korea agreed to absolute quotas for Steel with the administration. Aluminum Section 232 tariffs are applied to all countries except Argentina and Australia. Argentina agreed to absolute quotas for aluminum with the administration. 5 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Section 232: Who is impacted? Everyone that manufactures, exports and/or imports into the U.S. any of the “covered” products cited in either of these two investigation reports. Product exclusion process is available. Importer of Record is liable for payment of all duties. 6 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Section 232: Product Exclusion The Department of Commerce has issued procedures for requesting exclusions for specific products currently subject to the Section 232 tariffs on steel and aluminum. The exclusions will be approved on a product specific basis, limited to the company that requested it and likely limited to volume requested and valid only for a year. No deadline for submitting product exclusion request. Objections to product exclusion must be filed within 30 days of posting of the request for comment . Commerce intends to decide on each request within 90 days of filing. If approved, relief will be retroactive to the date the exclusion is posted for public comment. 7 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Section 232: Product Exclusion As of June 18, 2018: Steel Aluminum 2,503 20,003 exclusions requested 42 GRANTED/56 DENIED 8 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Section 232: Auto/Auto Parts Case On May 23, 2018, the Department of Commerce initiated a Section 232 investigation into imports of automobiles, including SUVs, vans and light trucks, and automotive parts. Within 270 days (Feb. 17, 2019) the DOC must submit a report the President with its findings and recommendation. The President has 90 days after receiving the DOC report to determine whether he concurs with findings and must take action to adjust imports 15 days after taking action. 9 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Section 232: Auto/Auto Parts Timeline June 29: written comments, data, analyses due June 29: request to appear at public hearing due July 13: rebuttal comments due July 19 & 20: public hearing in Washington, D.C. Tariffs on Auto/Auto Parts likely to be announced by September, ahead of mid-terms 10 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Section 232: Retaliatory Actions Canada Mexico PRC EU July 1 June 5 April 2 June 22 $12.8 $3 Billion $3 Billion $3.2 Billion Billion India Turkey Russia and Japan Aug. 4 No Date No Date/ $240 $266 Products Million Million 11 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Retaliation from Canada Effective Date of Tariffs: July 1 st Annual U.S. Export Value: Approximately $12.8 billion Type of Retaliation: 25% tariffs on steel products and 10% tariffs on other products Products Covered (Example): List not finalized; final comments submitted June 15 (25% Tariff) (10% Tariff) Stainless steel and stainless steel products , Aluminum products, including bars, rods, profiles, including bar, rods, wire, and casing or tubing used wire, pipes, tubes, pipe fittings, sheets and strips, in drilling for oil or gas aluminum structures, and other articles of aluminum Iron and non-alloy steel products, including bars, Parts of iron or steel for stoves, ranges, grates, rods, wire, tubes, and pipes cookers, barbeques, braziers, plate warmers, and Alloy steel and alloy steel products, including bars, other similar non-electric domestic appliances Refrigerator-freezers, water heaters, dishwashing rods, and wire Angles, shapes, and section of other alloy steel machines, laundry washing machines Other casing or tubing, of a kind used in drilling for Boats, including sailboats and motor boats oil or gas 12 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Retaliation from Canada Other Products Covered: (10% Tariff) Processed foods, including yogurt, prepared foods, orange juice, ketchup, mayonnaise, mustard, soups, waters and whiskies Consumer goods, shaving cream, dishwasher detergents, soaps, perfumes, candles, toilet paper, tableware and kitchenware, tablecloths, mowers, sleeping bags, mattresses, pens Chemicals and other similar products, including insecticides and herbicides 13 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Retaliation from Mexico Effective Date of Tariffs: June 5th Annual U.S. Export Value: Approximately $3 billion Type of Retaliation: Tariffs of 7% to 25% Products Covered: Steel products, including plates, rods, bars, tubes and pipes (25% Tariff) Products coated in aluminum (15% Tariff) Other Products: Apples (20%) Fans (10%) Cranberries (20%) Motor boats, except for outboard motor (15%) Potatoes (20%) Lamps and lighting fixtures (15%) Cheese products, including fresh, grated or powder (20- Food preparations (15%) 25%) Pork and ham products (15-20%) Tennessee or bourbon whiskey (25%) 14 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Retaliation from the European Union Effective Date of Tariffs: June 22 Annual U.S. Export Value: $3.2 billion Type of Retaliation: Tariffs of 25%-50% for initial list, tariffs of 10%-25% for second list Products Covered: (25% Tariff) Steel and steel products Iron and non-alloy steel and products, including tubes, pipes and hollow profiles Stainless steel and stainless steel products, including bars and rods, pallets, flat-rolled steel, nuts, wire, tubes and pipes Products of alloy steel other than stainless Aluminum, including plates, sheets and strip Products of iron and steel including cooking ware Doors, windows, and their frames of iron or steel Motor boats, sailboats, yachts, row boats and canoes Motorcycles 15 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Retaliation from the European Union Other Products Covered (25% Tariff): Ovens, air heaters, and sinks Textiles, apparel and footwear (t-shirts, jeans, cotton pants and trousers, shoes, bedlinen) Make-up, manicure and pedicure preparations Bourbon and whiskey Corn, sweetcorn, kidney beans and rice Cranberries and cranberry juice, peanut butter, orange juice Tobacco (tobacco from leaves, water-pipe tobacco, chewing tobacco, cigarettes, and cigars) 16 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
Retaliation from China Effective Date of Tariffs: April 2nd Annual U.S. Export Value: Approximately $3 billion Type of Retaliation: 25% tariffs on pork and aluminum scrap and 15% tariffs on other products Products Covered: (25% Tariff) (15% Tariff) Aluminum scrap Stainless steel products, including pipes Other steel products Seamless tubes, pipes and hollow profiles of iron and steel 17 ARENT FOX LLP LA / NY / SF / DC June 22, 2018
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