Trade Cases
Bell: Tariff Rate Quota on the Table in Trade Talks with EU
Written by Tim Triplett
September 9, 2021
There’s a good chance the Section 232 tariffs on steel imports from the European Union could be replaced by a tariff rate quota (TRQ) as soon as November as a result of trade talks now under way between officials from the U.S. and EU. The EU is strongly opposed to the Trump-era “national security” tariffs on steel and aluminum and has threatened additional retaliatory tariffs of its own on various goods unless the U.S. offers an alternative.
“It appears the two sides are looking seriously at a tariff rate quota,” said Steel Manufacturers Association (SMA) President Phil Bell in comments to Steel Market Update today.
SMA would support a TRQ under certain conditions, Bell said. For one, the exclusions to the Section 232 tariffs would need to be eliminated. Commerce has granted a large number of exclusions on products from countries all over the world, not just the EU. “If we let the additional volumes from the EU come in via a TRQ, those tons would have to be offset in some way,” Bell said.
Second, terms of the TRQ would have to be flexible to account for the differences between specific products. And third, the tonnages imported from EU countries would have to be measurable and verifiable. “We also hope the discussions talk about subsidies and what we can do together to decarbonize the global steel industry,” Bell added.
TRQs are usually set based on historical import periods. EU steel exports to the U.S. would be tariff-free up to a certain base level, after which a tariff would kick in. The import level and the tariff rate are subject to negotiation, but the duty on tonnages exceeding the quota could turn out to be more or less than the 25% rate under Section 232, Bell noted.
The two sides are working toward a Nov. 1 deadline to reach an agreement. “I am pretty confident that deadline will be met. This is a high priority for the administration. They have their A teams working on this,” Bell said.
Section 232, put in place by President Trump in 2018, was meant as a temporary fix against unfair import surges. It’s necessity as a safeguard has grown hard to defend by a domestic steel industry that is enjoying record sales and profits.
Will a TRQ pact with the EU be the first domino to fall, with other countries seeking the same treatment? “That’s hard to say,” said Bell. “The EU is a big ally, but there are a lot of bad actors out there where Section 232 still needs to apply – most notably China. But if we get a workable agreement here, this could serve as a potential roadmap for other countries.”
By Tim Triplett, Tim@SteelMarketUpdate.com
Tim Triplett
Read more from Tim TriplettLatest in Trade Cases
Mills allege ‘critical circumstances’ in CORE trade case vs. South Africa, UAE
"Recent activity in the marketplace strongly indicates that these imports are being rushed into the United States in an effort to avoid the imposition of antidumping duties," petitioners said.
European Commission eyes retaliation vs. Trump steel tariffs: Report
The European Commission is looking into making current quotas on steel imports stricter as a countermeasure to President Trump’s recently announced tariffs on steel and aluminum imports to the US, according to an article in Reuters.
Trump could levy tariffs on auto imports in April: Report
President Donald Trump said last week that he could place tariffs on auto imports, according to an article in Politico.
Section 232 tariffs are headed downstream
The Trump administration has revealed the list of derivative steel products being added to the Section 232 tariff list.
Leibowitz: In Trump’s brave new world of tariffs, what will stick and what will courts challenge?
With a chronic trade deficit, the administration will continue to cite more tariffs as necessary. This is in error, as noted above. Yet the base of President Trump’s support does not see it that way. More tariffs are possible. But the only way to reduce the US trade deficit substantially is to close the gap between savings and investment in the United States.