Section 232 Tariffs

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On August 10, 2018, President Trump issued a new Proclamation Adjusting Imports of Steel into the United States from Turkey. Steel articles covered by Section 232 from Turkey are now subject to an ad valorem duty rate of 50%.

On August 12, 2018, U.S. Customs and Border Patrol (CBP) issued Cargo Systems Messaging Service (CSMS) #18-000477, which stated:

  • The increased duty rates began at 12:01 a.m. EDT on August 13, 2018.
  • In addition to reporting the regular Chapters 72 & 73 of the Harmonized Tariff Schedule of the United States (HTSUS) classification for the imported merchandise, importers shall report the following HTSUS classification for imported merchandise subject to the additional duty:
    • 9903.80.02 (50% ad valorem duty rate for products of iron and steel that are the product of Turkey).

The USTR announced on August 3rd that it will review Turkey’s eligibility for the Generalized System of Preferences (GSP) program that grants duty-free access to the U.S. market. GSP is a U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. Concern over Turkey’s “compliance with the GSP market access criterion,” led the USTR to initiate the review. This also follows Turkey retaliatory tariffs on U.S. goods in response to the Section 232 tariffs imposed by the U.S. in March. Earlier this year, Commerce submitted reports to President Trump stating U.S. importers’ reliance on foreign-made aluminum and steel posed a national security risk.

In 2017, the top categories of goods imported from Turkey under the program were vehicles and vehicle parts, jewelry and precious metals, and stone articles. The final decision on Turkey’s GSP status will be made after a public hearing and comment process.

Steel imports from Turkey have fallen significantly according to data from the U.S. International Trade Commission. Steel imports from Turkey were 1.3% of total U.S. steel imports from January to June of 2018 and dropped over 41% since June 2017. Following on the heels of the USTR’s announcement regarding Turkey’s GSP eligibility review, on August 10, 2018, President Trump threatened to double the Section 232 tariffs on steel and aluminum imports from Turkey, to 50 percent and 20 percent, respectively claiming that the existing tariffs have less of an impact due to Turkey’s currency, the lira, depreciating against the U.S. dollar.

The White House issued the following statement:

“[T]he President has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey. Section 232 tariffs are imposed on imports from particular countries whose exports threaten to impair national security as defined in Section 232, independent of negotiations on trade or any other matter.”

For further information, please contact us.

 

On July 5, 2018, U.S. Customs and Border Protection (CBP) hosted a teleconference to review Section 301 filings requirements, allow members of the trade community to seek clarifications and raise questions, and outline resources CBP has in place.

The first set of Section 301 tariff increases is effective on July 6, 2018.

This is the second round of tariff increases following the recent Section 232 tariffs on steel and aluminum. CBP is highly interested in hearing from the trade community to ensure effective implementation of the new 301 tariffs. If a business or importer has specific questions or concerns, CBP encourages them to contact the agency at traderemedy@cbp.dhs.gov.

CBP recommends monitoring the Federal Register and USTR website for the forthcoming exclusion process. This will be provided in a separate Federal Register Notice (FRN).

There is also a second list of 284 tariff lines covering approximately $16 billion of imports from China under consideration for implementation. These were identified by the interagency Section 301 group and are currently undergoing a public notice and comment process, including a public hearing.

On the call, CBP clarified that the 25% tariff is limited to goods with a country of origin (CoO) and NOT a country of export, of the People’s Republic of China (excluding Hong Kong and Macao).

Other highlights are included below:

  • Free Trade Zones (FTZ): Goods entering as privileged foreign (PF) before 12:01 AM on July 6 will not be subject to, or assessed, the new duties. The FRN specifies applicability to products admitted to FTZs on or after the effective date. The notice does not discuss PF status prior to the effective date. It was confirmed that the ACE system has been updated to reflect this.
  • Harmonized Tariff Schedule of the U.S. (HTSUS) Subheading 9903.88.10 should be active in system.
  • There are no quotas related to Section 301. The ACE quota module is not being used and is not tied to Section 301 products. Members of the trade community should not receive any quota messages unless the product is subject to an applicable quota, however, CBP does not believe that the over 800 HS codes subject to the 25% tariff are also subject to an applicable quota.
  • If Chapter 98 provisions are applied correctly from a compliance perspective, then the rates of duty imposed under Section 301 will not apply. Importers must follow the instructions and properly file claims for HTSUS Chapter 98 entries.
  • Importers must report if a product meets the requirements of Section 301 by using the correct HTSUS Subheading (i.e., 9903.88.10).
  • De Minimis: It was noted that if a product meets Section 301 requirements and is under the $800 threshold, the shipment should follow existing procedures.
  • CBP has indicated that they will, under a case-by-case review approach, grant leeway to members of the trade community experiencing some of the more complicated questions and/or complex technical matters raised on the call. CBP has asked parties to document questions, so that they can be responded to. For example, there are open FTZ questions, questions related to sets and kits where an import specialist may be able to assist and/or a ruling needs to be requested.

The CBP web page for Section 301 trade remedies against China may be found here.

CBP announced it is developing a Section 301 Frequently Asked Questions (FAQs) web page.

 

 

 

This week will see the implementation of previously announced tariff increases from the U.S., China, and Mexico.

Thursday, July 5 – Section 232 (Mexico)

Mexico will implement the second round of its retaliation for the U.S.’ increased tariffs on imports of certain steel and aluminum products with additional tariffs of 10-15% on pork and cheese products.

Friday, July 6 – Section 301 (U.S. and China)

The U.S. will impose another 25% in duties on 818 tariff lines (see Annex B) worth $34 billion from China on July 6. The additional tariffs are part of the U.S.’ response to China’s alleged unfair trade practices related to “the forced transfer of American technology and intellectual property” pursuant to Section 301 of the Trade Act of 1974.

That same day, China has announced it will respond in kind by increasing duties on 545 tariff lines by the same amount. This action is also valued at $34 billion. Agricultural products, sport utility vehicles, and electric vehicles are among the goods targeted by China.

For all of the latest tariff news, please click here.

 

 

 

 

On June 29, 2018, Canada released its retaliatory tariff list in response to the U.S. Section 232 tariffs on imports of certain steel and aluminum products from Canada at the rates of 25% and 10%, respectively.

The list is broken out into three tables. Items in Table 1 will be subject to a 25 per cent surtax, while items in Tables 2 and 3 will be subject to a 10 per cent surtax.

Canada released an initial list for public consultation on May 31, 2018, and received over 1,000 submissions.

This final list is effective as of July 1, 2018. These countermeasures are against C$16.6 billion in imports of steel, aluminum, and other products from the U.S., representing the value of 2017 Canadian exports affected by the U.S. tariffs.

The announcement states the countermeasures will not apply to U.S. goods that are in transit to Canada on the day on which these countermeasures come into force.

Country Covered Products Rate Increase Effective Date
Canada For covered products, please click here. Table 1 – 25%
Table 2 – 10%
Table 3 – 10%		 7/1/2018
Status: The Canadian government received over 1,000 submissions of public feedback during public consultations on its original list.

Canada is imposing countermeasures against C$16.6 billion in imports of steel, aluminum, and other products from the U.S., representing the value of 2017 Canadian exports affected by the U.S. tariffs.

On June 21, 2018, the U.S. Department of Commerce published in the Federal Register an extended commenting schedule in the Section 232 investigation on U.S. imports of automobiles, including cars, SUVs, vans and light trucks, and automotive parts.

Commerce is now extending that comment period by a week from the initial deadline.

Interested parties are invited to submit comments, data, analyses, or other information pertinent to the investigation by June 29, 2018. Rebuttals to any  comments are now due by July 13, 2018.

June 29, 2018 is also the deadline for requesting to appear at the public hearing and for submissions of a summary of expected testimony. The public hearing will continue to be held on July 19 and 20, 2018 in Washington, DC.

Commerce initiated the Section 232 national security investigation on U.S. imports of automobiles and auto parts on May 23, 2018. Similar to the earlier completed 232 investigations on steel and aluminum, the investigation will determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security as defined in Section 232. For details, please click here, and here.

 

Last updated on 10/15/2018: certain HTSUS subheadings covered by the supplemental action were modified as of October 1, 2018. This notice conforms the September 21 supplemental action to the HTSUS modifications in the Presidential Proclamation and amends the prior action taken in the investigation by removing certain subheadings of the HTSUS listed in Annex A to the September 21st Notice. 83 FR 49153.

Unofficial spreadsheet with Final 301 list, partial list, and HTS’ removed added.

U.S. Trade Actions

Action Covered Products Rate Increase Effective Date
Section 232 Steel and Aluminum Steel – 25%
Aluminum – 10%		 6/1/2018
Status: Steel – all countries of origin except South Korea, Brazil, and Argentina (agreed to quotas); and Australia (exempted).

Aluminum – all countries of origin except Argentina (agreed to quota); and Australia (exempted).

Beginning August 13, steel articles covered by Section 232 from Turkey are subject to an ad valorem duty rate of 50%.
Section 232 Autos and Automotive Parts TBD TBD
Status: For the latest status, please click here.
Section 301 For the final list of products in List 1, please click here.

For the final list of products in List 2, please click here.

For the final list of products in List 3, please click here.

 25%

 

25%

 

10%

25%

 7/6/2018

 

8/23/2018

 

9/24/2018

1/1/2019
Status: List 1 totaling $34 billion worth of imports is composed of 818 tariff lines, and went into effect on 7/6/2018.

List 2 totaling $16 billion worth of imports was originally composed of 284 proposed tariff lines identified by the interagency Section 301 Committee. 279 of the 284 lines went into effect on 8/23/2018.

For full details on List 2, please click here.

List 3 totaling approximately $200 billion of imports was originally composed of 6,031 tariff lines. 5,745 full and partial lines go into effect on 9/24/2018.

For full details on List 3, please click here.

Unofficial searchable and filterable spreadsheet with Current U.S. Section 301 Tariff Lists (Updated for Final List 3)

Retaliatory Actions

 

Canada For covered products, please click here. Table 1 – 25%
Table 2 – 10%
Table 3 – 10%		 7/1/2018
Status: The Canadian government received over 1,000 submissions of public feedback during public consultations on its original list.

Canada is imposing countermeasures against C$16.6 billion in imports of steel, aluminum, and other products from the U.S., representing the value of 2017 Canadian exports affected by the U.S. tariffs.
EU For covered products, please click here. Annex I – 10% or 25%
Annex II – 10% – 50%		 Annex I – 6/22/2018
Annex II – 3/23/2018 or 5th day after WTO Dispute Settlement Body rules against the U.S. action, whichever is first.
Status: For the latest status, please click here.
Mexico For the translated list of covered products, please click here. 7% – 25% (pages 1-4)

 

10% – 15% (page 5)

 6/5/2018

7/5/2018
Status: Most retaliatory measures effective as of 6/5/2018. An “exception” list is effective on 7/5/2018.
China (Response to Section 232 Tariffs) For covered products, please click here. Annex I – 15% – 25% 4/3/2018
Status: See above.
China (Response to Section 301 Tariffs) For covered products in List 1, please click here.

(Unofficial Version)

 25% 7/6/2018
For covered products in List 2, please click here.(Unofficial Version) 25% 8/23/2018
For covered products in List 3 (announced August 3), please click here.(Unofficial Version) Annex 1 and 2 – now 10%

Annex 3 – now 5%

Annex 4 – remains 5%

(Originally 1-3 were 25, 20, and 10 percent, respectively)

 9/24/2018
Status: List 1 is composed of 545 tariff lines, and goes into effect on 7/6/2018.

List 2 contains 333 tariff lines on U.S. goods worth $16 billion. Start date is 8/23/2018.

List 3 contains 5,207 tariff lines on U.S. worth $60 billion. Start date is 9/24/2018.
India For covered products, please click here. Up to $10.6 billion;
Annex I – 5% – 100%		 6/21/2018
Status: The U.S. declined India’s request for WTO consultations. Thus leading to India’s retaliation tariffs on U.S. goods, effective immediately.
Japan For covered products, please click here. Up to $1.91 billion TBD – no earlier than March 23, 2021, or the 5th day following the date of a decision from the WTO DSB, whichever comes first.
Status: No update since May 18, 2018. Ambassador Lighthizer is holding trade talks with Economy Minister Motegi in July. Under Secretary McKinney is also leading a trade mission to Japan to discuss a possible bilateral trade deal.
Russia For covered products, please click here. Up to $3.16 billion TBD
Status: Russia will apply the proposed suspension of equivalent concessions upon the expiration of 30 days from the day on which Council on Trade in Goods has been notified. The suspension will continue until the U.S. lifts the safeguard measures.
Turkey For covered products, please click here. Up to $1.78 billion;
Annex I – 5% – 40%		 6/21/2018
Status: The U.S. declined Turkey’s request for WTO consultations due to the provisions of the Safeguard Agreement. The Government of Turkey proposed the suspension of concessions and other obligations starting June 21, 2018.

On August 15, 2018, in retaliation for the doubling of U.S. steel tariffs, the Government of Turkey reserved its right to further suspend substantially equivalent concessions and other obligations based on the trade impact resulting from the new measures of the United States. Additionally, Turkey again requested WTO consultations with the U.S. due to the provisions of the Safeguard Agreement.

Update on 8/22/2018: added the Government of Turkey’s WTO response to the U.S.’ doubling of tariffs on steel articles covered by Section 232 imported from Turkey.

Update on 8/16/2018: added link to Federal Register Notice formalizing China List 2 Section 301 tariffs.

Update on 8/14/2018: added new Section 232 tariff of 50% on steel from Turkey.

Update on 8/8/2018: added China’s retaliatory tariffs on $16 billion – List of affected HTS Subheadings includes additional 219 tariff items, plus tariff rate of 25%.

Update on 8/7/2017: added USTR’s final list of covered products for Section 301 List 2 tariffs with 25% tariff rate.

Update on 8/3/18: added China’s latest Section 301 (List 3) retaliatory tariffs.

Update on 8/2/2018: changed the proposed rate for China Section 301 List 3 from 10 percent to 25 percent.

Update on 7/13/2018: added link to an unofficial searchable and filterable spreadsheet listing the tariff codes for all three current U.S. Section 301 tariff lists (see last line in Section 301 Status).

Update on 7/11/2018: added new U.S. Section 301 tariffs announced on 7/10/2018.

Update on 7/2/2018: added EU Annex I tariffs effective.

Update on 6/29/2018: added Canadian retaliatory tariffs.

Update on 6/21/2018: added India, Japan, Russia, and Turkey.

Update on 6/18/2018: added China’s Section 301 retaliatory tariffs.

Update on 6/15/2018: added new U.S. Section 301 tariffs; added translated version of Mexican retaliatory measures and updated Mexico section.

Update on 9/18/2018: added the final list of products in List 3, its tariff rate of 10 percent, effective date of 9/24/2018, and tariff rate of 25 percent effective on 1/1/2019. Also, China’s retaliatory action for the new tariffs has been updated. The tariff rates changed for three of the four annexes. The new tariffs are effective on 9/24/2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On June 6, the European Commission (Commission) issued a press release stating, “The College of Commissioners endorsed today the decision to impose additional duties on the full list of US products notified to the World Trade Organisation (WTO), as part of the EU’s response to the US tariffs on steel and aluminium products.”

The release went on to state, “Following today’s decision to apply additional duties to selected imports from the United States, the Commission expects to conclude the relevant procedure in coordination with Member States before the end of June so that the new duties start applying in July.”

The Commission asserts the “rebalancing duties is fully in line with WTO rules, and corresponds to a list of products previously notified to the WTO. The WTO Safeguards Agreement allows for a rebalancing corresponding to the damage caused by the US measures with EU exports worth €6.4 billion (2017) being affected. The EU will therefore exercise its rights immediately on US products valued at up to €2.8 billion of trade. The remaining rebalancing on trade valued at €3.6 billion will take place at a later stage – in three years’ time or after a positive finding in WTO dispute settlement if that should come sooner.”

The retaliation tariffs (the rebalancing duties) may be found here. Those expected to begin in July are listed in Annex I (almost all at 25 percent). Annex II contains those to begin in three years, or after a positive finding in WTO dispute settlement. Those tariffs range from 10 to 50 percent.

 

On June 5, U.S. Customs and Border Protection (CBP) issued a message providing instructions for importers who receive approval for a steel or aluminum product exclusion from the Department of Commerce (DOC).

The message states, “Upon receipt of the approved product exclusion from the DOC, for the importer of record listed in the approved exclusion, please provide that company’s name, address and importer of record number, and the associated product exclusion number, to U.S. Customs and Border Protection (CBP) at Traderemedy@cbp.dhs.gov. You must provide this information to CBP before the importer of record submits the exclusion number with entries to CBP.”

Further instructions on how to provide the information are included.

It adds, “Exclusions granted by DOC are retroactive on imports to the date the request for exclusion was posted for public comment at Regulations.gov. To request an administrative refund for previous imports of excluded products granted by DOC, importers may file a Post-Summary Correction (PSC) and provide the product exclusion number in the Importer Additional Declaration Field.”

The message also states if an “entry has already liquidated, importers may protest the liquidation.”

 

 

Media sources are reporting the Department of Commerce will not consider steel and aluminum product exclusions for countries subject to quotas. Only countries facing the tariffs will be considered for product exclusions.

Currently, South Korea, Brazil, and Argentina have agreed to an absolute quota deal on certain steel products that are subject to the Section 232 tariffs.

The steel quotas are separated into 54 subcategories for South Korea, Argentina, and Brazil. Argentina has already reached its absolute quota for 40 of the 54 subcategories, while 18 subcategories have been filled for Brazil, and 9 have been filled for South Korea.

As of June 1, 2018, all countries of origin except Argentina and Australia are subject to the 10 percent tariff on aluminum products. Argentina agreed to cap exports of aluminum at 100 percent of the average exports to the U.S. over the last 3 years. The absolute quota is divided into two subcategories, equaling over 180,000 short tons per year.

Once a country reaches its quota for the quota period no entry for consumption of the product will be permitted.

Australia is currently the only country to have maintained a country-based exemption without having agreed to a quota regime.