The Section 232 tariffs on steel and aluminium imports into the United States will be applied to select downstream steel and aluminium products, President Donald Trump announced late on Friday January 24.
The tariff rates for downstream steel and aluminium products imported into the US, or withdrawn from warehouse for consumption, will be 25% and 10% respectively, and will take effect at 12:01am Eastern Time on February 8, Trump wrote in a presidential proclamation.
Notably, steel shipments from Argentina, Australia, Brazil, Canada, Mexico and South Korea will be exempt, as will aluminium imports from Argentina, Australia, Canada and Mexico, according to the proclamation.
“Although imports of aluminium articles and steel articles have declined since the imposition of the tariffs and quotas, the Secretary [of Commerce] has informed me that imports of certain derivatives of aluminium articles and imports of certain derivatives of steel articles have significantly increased since the imposition of the tariffs and quotas,” Trump wrote on Friday, arguing that the increased imports undermined the purpose of the 232 duties.
Fastmarkets previously reported that an influx of cheap finished steel products, not covered by the Section 232 tariffs, had eroded the market share and competitiveness of downstream manufacturers in the United States, with the net result being idled capacity and layoffs amid higher production costs.
From June 2018 to May 2019, imports of steel nails, tacks, drawing pins, corrugated nails, staples and similar derivative articles increased by 33% compared with June 2017 to May 2018, the proclamation said.
On the non-ferrous side, imports of aluminium stranded wire, cables, plaited bands and similar products increased by 152% year on year in the same comparison.
“Finally, from June 2018 to May 2019, import volumes of bumper and body stampings of aluminium and steel for motor vehicles and tractors increased by 38% compared to June 2017 to May 2018,” according to the proclamation.
“Manufacturers may request exclusions for any specific derivative article [steel or aluminium] determined not to be produced in the US in a sufficient quantity or reasonable quality, or if importing such material is proven critical in preserving national security interests,” Cowen analysts Tyler Kenyon and Matthew Berry wrote in a research note on Sunday January 26.