On March 8, 2018, notwithstanding pleas from many members of Congress and expressions of concern and promised retaliation from countries around the world, President Trump signed two Presidential Proclamations that will impose steep tariffs on U.S. imports of certain steel and aluminum products pursuant to Section 232 of the Trade Expansion Act of 1962, as amended (“Section 232”).  As stated in the Presidential Proclamation on Adjusting Imports of Steel into the United States (the “Section 232 Steel Proclamation”), the tariff on the covered steel products will be 25 percent (the “Section 232 Steel Tariff”), and in accordance with the Presidential Proclamation on Adjusting Imports of Aluminum into the United States (the “Section 232 Aluminum Proclamation”), the tariff on the specified aluminum products will be 10 percent (the “Section 232 Aluminum Tariff”).  The Section 232 Steel Tariff and the Section 232 Aluminum Tariff (collectively, the “Section 232 Tariffs”) will go into effect on March 23, 2018.  Significantly, certain countries already have been temporarily exempted from the tariffs (i.e., Canada and Mexico) while other close U.S. allies may be granted similar exemptions.  In addition, the U.S. Department of Commerce (“DOC”) has been directed to establish procedures in the very near future pursuant to which U.S. entities can request to have certain items excluded from the scope of the Section 232 Tariffs.

Covered Products

Pursuant to the Section 232 Steel Proclamation, the steel products that will be subject to the Section 232 Steel Tariff are defined to include products classified under the following Harmonized Tariff Schedule (“HTS”) 6-digit level subheadings: 7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90 (collectively, the “Steel Products”).  The Steel Products include a wide variety of steel ingots, bars, rods, angles, rails, plates, tubes, pipes, hollow profiles, wire, and sheet piling.

In accordance with the Section 232 Aluminum Proclamation, the aluminum products that will be subject to the Section 232 Aluminum Tariff include products classified under the following HTS headings and subheadings:  7601, 7604, 7605, 7606, 7607, 7608, 7609, 7616.99.51.60, and 7616.99.51.70 (collectively, the “Aluminum Products”).  The Aluminum Products include, among other things: unwrought aluminum; aluminum bars, rods, and profiles; aluminum wire; aluminum plate, sheet, strip, and foil (flat rolled products); aluminum tubes and pipes and tub and pipe fitting; and aluminum castings and forgings.

Notably, both the Section 232 Steel Proclamation and the Section 232 Aluminum Proclamation require that the DOC Secretary “shall inform the President of any circumstances that in the Secretary’s opinion might indicate the need for further action by the President.”  Pursuant to this authority, it is possible that the DOC Secretary could recommend that the scope of products covered by the Section 232 Tariffs be expanded.

Product Exclusions

Both Section 232 Proclamations require that the DOC Secretary establish procedures to permit entities located in the United States to request that certain products be excluded from the scope of the products covered by the Section 232 Tariffs (the “Scope Exclusion Request Procedures”).  The Scope Exclusion Request Procedures must be promulgated by March 18, 2018.

While the DOC Secretary has considerable latitude in designing certain aspects of the Scope Exclusion Request Procedures, the criteria that must be followed in order that Scope Exclusion Requests be granted are more clearly set forth in the Section 232 Proclamations.  Specifically, in order for a Scope Exclusion Request to be granted, it must be determined that the requested item is not produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality or that the request is justified by national security considerations.  The DOC must make this determination in consultation with the Secretary of State, the Secretary of the Treasury, the Secretary of Defense, the U.S. Trade Representative (“USTR”), the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, and such other Executive Branch officials as the DOC Secretary deems appropriate.

Country Exclusions

Pursuant to the Section 232 Proclamations, Canada and Mexico are temporarily exempt from the Section 232 Tariffs.  While no time period is set for how long the exemptions will last for either country under either of the Section 232 Proclamations, it is believed that they will continue as long as progress continues to be made in the NAFTA renegotiations taking place between the United States, Canada, and Mexico based on remarks made by President Trump during the signing ceremony for the Section 232 Proclamations.

No other country is specifically exempted from the Section 232 Tariffs.  However, both Section 232 Proclamations state that “[a]ny country with which we have a security relationship is welcome to discuss with the United States alternate ways to address the threatened impairment of [U.S.] national security caused by imports from that country,” and that, if “alternate arrangements” are agreed to, that Section 232 Tariffs may be modified or removed with respect to that country.   It has been reported that Australia and the EU, among others, are working with the United States to develop acceptable “alternate arrangements.”

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In summary, the Section 232 Tariffs will take effect on March 23, 2018.  There likely will be major developments that will take place prior to that time, which we will continue to monitor.  If you would like to receive updates relating to such developments or have specific questions or concerns about the Section 232 Tariffs, including ones relating to Scope Exclusion Requests, please contact either of the attorneys referenced below.

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

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