The Trump Administration’s imposition of additional tariffs of 25 percent on imported steel and 10 percent on imported aluminum has been met with retaliation on a global scale, with hapless companies caught in the crossfire.  The Administration’s tariffs were based on a little-used statute dating back to the Cold War, Section 232 of the Trade Expansion Act of 1962, in which articles imported into the U.S. are determined to impair National Security.  Since those tariffs have now been applied to our closest allies and traditional trading partners, those countries have deemed U.S. use of Section 232 nothing more than protectionism masquerading as national security concerns.  With another 232 investigation in progress on imports of autos and automotive parts, the future of our trade relations, particularly with the E.U., does not look favorable.

While the U.S. tariffs were imposed on imports of steel and aluminum, foreign countries retaliated against other U.S. sectors’ exports, focusing on commodities from states that have demonstrated support for the President and Republican leaders, such as motorcycles and cranberries from Wisconsin and whiskey from Kentucky.  Hence, on June 22, E.U. retaliatory tariffs of 25% went into effect on $3.2 billion dollars’ worth of U.S. products exported there, with another barrage to be fired off in three years depending on the outcome of the World Trade Organization challenge already filed by the E.U.  Targeted U.S. exports include clothing, appliances, bourbon, peanut butter and orange juice, just to name a few.  On July 1, Canada’s retaliatory tariffs of $12.5 billion on U.S. products take effect.  Mexico already implemented its tariffs two weeks ago.  Feeling the brunt of the retaliation are U.S. agricultural products, including soybeans and cranberries.  In response to the E.U.’s 25% retaliatory tariff, Harley-Davidson—the U.S. manufacturing icon—announced that it would be moving some of its motorcycle manufacturing jobs overseas, eliciting a sharp rebuke from the President.  But offshoring is not an option for everyone, so importers and exporters need to assess their particular situations and develop focused market strategies to survive the burgeoning trade war.

The U.S. exempted a handful of countries from the steel and aluminum tariffs, although not necessarily granting them exemptions for both metals.  Some countries secured the exemptions only by agreeing to quota restrictions. The steel and aluminum tariffs cover goods under specific subheadings of the Harmonized Tariff Schedule of the United States, so importers responsible for formal entry and payment of tariffs to U.S. Customs and Border Protection need to confirm whether their imported products are indeed subject to these tariffs.  There also may be situations where goods being entered not only are subject to the 232 tariffs, but also to Antidumping and Countervailing Duties—both of which are paid in addition to normal customs duties.  U.S. business operations that use covered steel and aluminum products may want to consider submitting scope exclusion requests to the U.S. Department of Commerce (Commerce).  For a request to be granted, it must be determined that the requested item is not produced in the U.S. in sufficient and reasonably available quantity or quality or that the request is justified by national security considerations.  Commerce has been busy processing these requests, granting some and denying others, leaving it open as a viable avenue for relief from the steel and aluminum tariffs.

Meanwhile, the U.S. is waging trade war on another front, this time against China’s policies and practices regarding technology transfer and intellectual property under Section 301 of the Trade Act of 1974.  The U.S. will impose an additional 25 percent in duties on Chinese imports, beginning July 6, starting with a list of 818 tariff items representing $34 billion dollars’ worth of Chinese products.  The President’s U.S. Trade Representative (USTR) released a second list of 284 tariff items representing $16 billion dollars’ worth of Chinese products.  Companies will have the opportunity to submit written comments by July 23, 2018 regarding the second list, providing U.S. importers the opportunity to mitigate the impact of additional tariffs for the listed items under consideration.  The USTR in the coming days plans to announce a product exclusion request process for products on the first list, that is expected to be like the exclusion request process for steel and aluminum.  In reaction to the 25 percent 301 tariffs, China—like its global counterparts—has identified U.S. products for retaliation, while the President has threatened to up the ante with even further tariffs should China retaliate.

Those caught in the crossfire—whether importers, exporters, manufacturers, purchasers, or downstream users—may wish to contact the International Trade attorneys at FisherBroyles, LLP to identify products subject to tariffs or possible tariffs, and to discuss options including avenues for exclusion, among other protective measures.

Philip Gallas
Philip Gallas
philip.gallas@fisherbroyles.com
(816) 401-9622

Michael Cone
Michael Cone
michael.cone@fisherbroyles.com
(212) 655-5471

Chris Pey
Chris Pey
chris.pey@fisherbroyles.com
(646) 233-2533

Geoffrey Goodale
Geoffrey Goodale
geoffrey.goodale@fisherbroyles.com
(202) 261-6644

Jonathan Cain
Jonathan Cain
jonathan.cain@fisherbroyles.com
(202) 844-2480

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