Trade Cases

Leibowitz on Trade: The Latest on Country Exemptions

May 6, 2018

Lewis Leibowitz, a Washington trade attorney and contributor to Steel Market Update, reports on announcements this past week on Trump administration tariff exemptions/quotas:

• Argentina reached a quota agreement on steel, which means that imports from that country (mostly seamless pipe for energy use) will not pay the 25 percent tariff. They agreed to an annual quota of 135 percent of the three-year average of shipments to the United States. This translates, according to sources, to about 180,000 tons of steel. Much of that total will come as unfinished pipe to be finished in U.S. facilities. Tenaris has such facilities that rely on unfinished pipe from Argentina. The details of the agreement, including the quota categories, are not yet available. Argentina also agreed to quotas equal to 100 percent of the three-year average of shipments of aluminum to the United States.

• The U.S. also announced a quota agreement with Brazil, but the Brazilian government was not so sure, at least initially. The Brazil agreement looks similar to the South Korean agreement in that the annual quota is equal to 70 percent of the three-year average of shipments to the United States. That will yield a 14.5 percent reduction in shipments from Brazil. The interplay between the quota deal and product exclusions is not yet clear—but neither is the approval of any exclusion requests so far. As reported earlier, Brazil will not be relieved from the 10 percent tariff on aluminum.

• Australia tried to spike rumors that they are going to have a quota on steel shipments. According to news reports, the Australian government is insisting that the exemption from the tariffs is permanent and unconditional. The U.S. has not confirmed this.

• More product exclusion requests were posted online this week, bringing the total to 1,381. Numerous requests for semifinished steel products have been posted over the last few days. The first objections were due by midnight May 3. There are no guarantees objections will be posted immediately, if any are received.

• Multiple exclusion requests have been received from a large number of companies. Schick Manufacturing has filed more than 50 requests for stainless steel strip used to make razor blades. The exclusion requests maintain that razor blade steel has not been made in the United States for some time.

More than 1,000 economists have written a letter to President Trump urging that he change his decision on tariffs. A similar letter was sent to Herbert Hoover, urging him not to sign the now-infamous Smoot-Hawley Tariff Act in 1930. The economists wrote: “Congress did not take economists’ advice in 1930, and Americans across the country paid the price. The undersigned economists and teachers of economics strongly urge you not to repeat that mistake. Much has changed since 1930 — for example, trade is now significantly more important to our economy — but the fundamental economic principles as explained at the time have not.”

A reminder that Lewis Leibowitz will be addressing your questions at the next SMU Steel Summit Conference which is August 27, 28 & 29th of this year. You can find more information about the conference and how to register on our website: www.SteelMarketUpdate.com/Events/Steel-Summit.