Leibowitz: The State of Steel as of May 1st

The president issued a new proclamation last night, just hours before the steel and aluminum tariffs were scheduled to apply to covered imports from all countries. There were no new exemptions, and the current country exemptions were extended, in three groups. Group I—the EU, Canada and Mexico—received a renewed exemption for another month. On June 1, the tariffs will go into effect on those countries, unless the president does something before that date.

Group II—Argentina, Australia, Brazil—received “indefinite” exemptions. Agreements in principle were announced last night, meaning that details need to be worked out (such as quota levels). The proclamation announced that, if those details take too long, the president may “consider” reinstating the tariffs on one or more of those countries. Unless the president does something, however, those countries will remain exempt.

Group III—South Korea—has a final quota agreement on steel, which is in an Annex to the Steel Proclamation. Customs and Border Protection has a list of steel items subject to the quotas, which are retroactive to Jan. 1, 2018. Of 53 categories of steel products, 6 categories have already been filled for the year. Thanks to Steve Baker, Customs Counsel for the American Institute for International Steel, for his analysis, from which I have liberally drawn.

All other countries are subject to the tariffs. The efforts of several new countries to carve out exemptions were for naught, at least so far. 

The EU reacted negatively to their one-month reprieve. They (like most SMU readers) are keenly aware of the cost of uncertainty in all this. Without a supplier in an exempt country, the prospect of a 25 percent tariff on imported material is quite real for the foreseeable future. 

Product exclusions are still pending—the current count is nearly 1,000 posted online at the regulations.gov website. None thus far has been approved. 

WTO proceedings are ripening and battle will be joined in Geneva soon. Any country that goes that route may have a bit of a wait for an exemption agreement; however, litigation is always a potential part of negotiation. 

In a very real sense, however, it looks to me that the president blinked. Having given another month to Canada, Mexico and Europe, he has made it harder to credibly threaten to put tariffs on those countries and precipitate a trade war. If he were ready to do that, he probably would have done it last night. Circumstances may change in the next 30 days; but then again they may not. 

Steel Market Update is speaking with traders and steel mills that have foreign operations that export to the United States. We will present their viewpoints later this week.

Lewis Leibowitz

The Law Office of Lewis E. Leibowitz
1400 16th Street, N.W.
Suite 350
Washington, D.C. 20036

Phone: (202) 776-1142
Fax: (202) 861-2924
Cell: (202) 250-1551