Steel and Aluminum Tariffs Under Section 232
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The Problem
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On January 11, 2018, the Secretary of Commerce transmitted to me a report on his investigation into the effect of imports of steel mill articles and aluminum on the national security of the United States under section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862). In light of this conclusion, the Secretary recommended actions to adjust the imports of aluminum and steel articles so that such imports will not threaten to impair the national security. Among those recommendations was a global tariff of 24 percent on imports of steel articles and 7.7 percent on aluminum in order to reduce imports to a level that the Secretary assessed would enable domestic steel and aluminum producers to use approximately 80 percent of existing domestic production capacity and thereby achieve long-term economic viability through increased production. I concur in the Secretary’s findings.
Suggested Solutions
German automakers have proposed scrapping the EU’s 10% tax on auto imports from the U.S. and other countries and the 2.5% duty on auto imports in the U.S. As a prerequisite, we want Mr. Trump’s threat of imposing a 25% border tax on European auto imports off the table. We also want a 25% U.S. tax on imports of light trucks—pickup trucks, sport-utility vehicles, and big vans—scrapped.
BMW is convinced that free trade, with minimal or no barriers, benefits all concerned and is an important element in promoting national and international prosperity and well-being. Clearly this also applies to trans-Atlantic trade.
We need a free and fair trade for sure. A commercial war opposing allies is not consistent with our mission, with our history, with our current commitments for the global security. At the end of the day, it will destroy jobs, increase prices and the middle class will have to pay for it.
I believe we can build the right answers to legitimate concerns regarding trade imbalances, excesses and overcapacities by negotiating through the World Trade Organization and building cooperative solutions. We wrote these rules. We should follow them.
I'm convinced that if we decide to open our eyes wider, we will be stronger, we will overcome the dangers, we will not let the rampaging work of extreme nationalism shake a world full of hopes for greater prosperity.
Endorsers
Official Replies
As required under Section 232, the Secretary examined the effect of imports on national security requirements, including: domestic production needed for projected national defense requirements; the capacity of domestic industries to meet such requirements; existing and anticipated availabilities 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 including the investment, exploration, and development necessary to assure such growth; and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries; and the capacity of the United States to meet national security requirements.
National security also encompasses U.S. critical infrastructure sectors including transportation systems, the electric power grid, water systems, and energy generation systems. Domestic steel production is essential for national security applications. Statutory provisions illustrate that Congress believes domestic production capability is essential for defense requirements and critical infrastructure needs, and ultimately to the national security of the United States.
Due to the threat, as defined in Section 232, to national security from steel imports, the Secretary recommends that the President take immediate action by adjusting the level of these imports through quotas or tariffs. The quotas or tariffs imposed should be sufficient, even after any exceptions (if granted), to enable U.S. steel producers to operate at an 80 percent or better average capacity utilization rate based on available capacity in 2017.
National security is a very broadly encompassing topic. It is not just the narrow definition of defense needs, it also covers infrastructure needs and other needs. So we believe and our counsel believes that this is a perfectly valid interpretation of national security the way that it’s used in Section 232, which is much broader than you might think in terms of usual parlance.
Without this tariff and satisfactory outcomes in ongoing negotiations with Canada and Mexico, the industry will continue to decline, leaving the United States at risk of becoming reliant on foreign producers of steel to meet our national security needs — a situation that is fundamentally inconsistent with the safety and security of the American people.
Now, Therefore, I, Donald J. Trump, President of the United States of America, by the authority vested in me by the Constitution and the laws of the United States of America, including section 301 of title 3, United States Code, section 604 of the Trade Act of 1974, as amended, and section 232 of the Trade Expansion Act of 1962, as amended, do hereby proclaim as follows:
Except as otherwise provided, all steel articles imports specified in the Annex shall be subject to an additional 25 percent ad valorem rate of duty with respect to goods entered, and all imports of aluminum articles specified in the Annex shall be subject to an additional 10 percent ad valorem rate of duty with respect to goods entered, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on March 23, 2018.
The Secretary, in consultation with the Secretary of State, the Secretary of the Treasury, the Secretary of Defense, the United States Trade Representative (USTR), the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, and such other senior Executive Branch officials as the Secretary deems appropriate, is hereby authorized to provide relief from the additional duties set forth for any aluminum or steel article determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality and is also authorized to provide such relief based upon specific national security considerations. The Secretary shall continue to monitor imports of aluminum and steel articles and shall, from time to time,
On the one hand, the United States selectively excludes some countries and regions. On the other hand, it imposes tax measures on some WTO members, including China. The U.S. side's practice is a serious violation of the nondiscrimination principle of the multilateral trading system, and it seriously violates its tariff reduction commitments under the WTO.
The president has the ability unilaterally to increase tariffs, decrease tariffs, eliminate them, impose quotas, impose a combination of tariffs and quotas — more or less to do anything he wishes.
Notwithstanding the United States' characterization of these measures as security measures, they are in essence safeguard measures. They consist of remedial action that disturbs the balance of concessions and obligations resulting from the World Trade Organization agreement and restricts imports for the purpose of protecting domestic industry against foreign competition, for the sake of that industry's commercial prosperity.
Our proposed suspension of substantially equivalent concessions and other obligations to the trade of the United States takes the form of an increase in duty of 10%, 25%, 35% and 50% on selected products originating in the United States. Without prejudice to the effective exercise of its right to suspend substantially equivalent concessions or other obligations, the European Union hereby reserves its right to apply the proposed suspension from 20 June 2018 and from 23 March 2021 or from the fifth day following the date of the adoption by, or notification to, the WTO Dispute Settlement Body of a ruling that the United States' safeguard measures are inconsistent with the relevant provisions of the WTO Agreement, if that is earlier, and until the United States' safeguard measure is lifted.
This is a measured and proportionate response to the unilateral and illegal decision taken by the United States to impose tariffs on European steel and aluminum exports. What's more, the EU's reaction is fully in line with international trade law. We regret that the United States left us with no other option than to safeguard EU interests.
These unilateral tariffs, imposed under a false pretext of safeguarding U.S. national security, are inconsistent with the United States international trade obligations and WTO rules.
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