Trade Cases

Will Section 232 be a Bombshell or a Bust? We’ll Know Soon

Written by Tim Triplett

January 9, 2018

Anticipation is building over the Commerce Department’s Section 232 report, which is finally due to the White House in the next few days. Will its recommendations to the president on trade action to protect the national security prove to be a bombshell or a bust?

Proponents of new tariffs or quotas on steel imports have taken their case to the Twittersphere in recent days (where this particular president may well spot them). “If the flood of imports drives our steel producers out of business, the U.S. will become dangerously dependent on unreliable foreign suppliers for the steel that is critical to our national defense and infrastructure.  #AmericaSteelStrong,” posted the American Iron and Steel Institute. “It is the overall financial health of U.S. steel producers, and not simply the profitability of their defense business, that is essential to their ability to be reliable defense suppliers.” #AmericaSteelStrong,” tweeted ArcelorMittal, to cite just a couple of examples.

Washington trade attorney Lewis Leibowitz points out that the statutory deadline for the Commerce report is Monday, Jan. 15, which is a federal holiday (Martin Luther King Day). So, technically, the latest the president can receive the report is the first business day after the deadline, Tuesday, Jan. 16. “It could happen on Sunday, the 14th, especially if it is a nonevent because no remedy is forthcoming, drawing less attention from the Fourth Estate. But if it’s a bombshell, it will be announced on a weekday,” Leibowitz predicted. 

The Commerce Secretary’s recommendations could range from specific tariffs or quotas on any or all steel products to no new actions at all considering the effectiveness of existing antidumping and countervailing duty cases. “Alternatives to new tariffs or quotas under Section 232 include new safeguard cases on steel or self-initiated AD/CVD cases,” Leibowitz said.

At least one Steel Market Update source speculates that Commerce will indeed find that imports are a threat to national security, but the report will not recommend specific remedies because of resistance from the Department of Defense, which has expressed concern that the possible scope of the countries and the products covered is too broad and could impact relations with the nation’s allies. New Section 232 tariffs, broadly applied, would raise the cost of many manufactured goods and ultimately consumer prices.

Section 232 is far from the only trade issue in the works. Leibowitz expects other announcements from the White House before President Trump’s State of the Union address Jan. 30. They may include Section 301 measures against China for intellectual property violations, and reports on steel for pipelines and Buy America enforcement. Shortly after the State of the Union, a final determination is likely on Vietnam circumvention of U.S. corrosion-resistant and cold rolled steel duties. The president is also due to announce relief measures on two important safeguard cases—solar panels (Suniva) and large washing machines (Whirlpool)—which could potentially set precedents for other products. “Look for more Section 201 cases that allow the president to grant temporary import relief if these two cases result in import restrictions, Leibowitz said.

Tim Triplett

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Price: Should billions in Section 232 revenue go to foreign manufacturers or to the American people?

Do we want the benefits of the Section 232 tariffs to flow to the bottom lines of foreign steel and aluminum producers or to the US government and, ultimately, domestic manufacturers and their workers? In our view, the answer is simple. Section 232 exceptions do nothing more than lead to underserved profits for foreign manufacturers who are harming the US industrial base. That revenue could be used to pursue the Trump administration’s other policy priorities - such as deficit reduction or expanded tax cuts.