In May and June, the U.S. Department of Commerce held hearings and accepted hundreds of public comments for its investigations under section 232 of the Trade Expansion Act of 1962 to determine whether U.S. imports of steel and aluminum threaten national security.

DOC missed its self-imposed deadline of June 30 to release its reports and recommendations to President Trump as to what, if any, action to take to “adjust imports”. The delay was due to increased pressure from Capitol Hill and important members of the Trump administration (including Treasury Secretary Mnuchin, Defense Secretary Mattis, and National Economic Council Director Cohn) against any broad import restrictions due to concerns over supply chain disruptions and retaliation from major trading partners.

U.S. trading partners at the G-20 Summit in Germany last week reiterated their concerns over possible section 232 actions and promised swift retaliation against politically-sensitive U.S. exports (agricultural products and bourbon were specifically mentioned) and challenges at the World Trade Organization.

The G-20 Leaders declaration issued on July 8 called for the Global Forum on Steel Excess Capacity “to fulfill their commitments on enhancing information sharing by August 2017, and to rapidly develop concrete policy solutions to reduce steel excess capacity” with a “substantive report with concrete solutions by November” of this year. Arising out of last year’s G-20 summit in Hangzhou, the Global Forum is facilitated by the OECD and includes major steel producing nations. Leaders like Angela Merkel seek to invigorate the forum as a means of pressuring China on its excess capacity while warding off unilateral measures like those contemplated by the U.S. However, it has been slow in starting as it was only formally established last December. It is also important to note any recommendations arising from the forum would be non-binding.

Friday, July 7, brought two new developments which could cause further delays in the release of the section 232 reports. First, Politico reported Defense Secretary Mattis directed the Defense Logistics Agency to undertake a 60-day review of steel use in U.S. defense applications. Second, the U.S. International Trade Commission released its comprehensive study “Aluminum: Competitive Conditions Affecting the U.S. Industry”, conducted pursuant to Congressional request.

As of Monday, July 10, no section 232 reports or recommendations have been released. There have been many rumors regarding what measures DOC will recommend and President Trump will take under section 232, ranging from across-the-board import duties on all steel and aluminum from all sources, as well as tariff rate quotas, to exemptions for NAFTA and European sources, or certain types of steel and aluminum either not produced or available in sufficient supply domestically. The latter option could include an exemption/exclusion request and analysis period after the reports are issued, but no such process is required under the statute.

Until the reports are issued, companies should continue to monitor developments, advocate for desired outcomes, prepare for possible exclusion processes, and review their supply chains and contracts to be ready to deal with any broad section 232 action(s).

In addition to likely challenges by foreign governments at the WTO, companies and trade associations will likely challenge any adverse section 232 measures in U.S. court. Both WTO and U.S. challenges would raise novel questions regarding import restrictions taken in the name of “national security.”

Below are the remaining deadlines based for the two section 232 investigations, though action is expected well before these dates.

Steel 232 Investigation

Aluminum 232 Investigation

For more information, contact: Jeff Snyder; Robert Holleyman; Dan Cannistra; Bob LaFrankie