On January 24, 2020, the White House issued a proclamation announcing additional 25 and 10 percent tariffs on certain products of steel and aluminum, effective February 8, 2020.

All imports of derivative aluminum articles specified in Annex I to this proclamation shall be subject to an additional 10 percent ad valorem rate of duty, and all imports of derivative steel articles specified in Annex II to this proclamation shall be subject to an additional 25 percent ad valorem rate of duty, with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on February 8, 2020.

These rates of duty, which are in addition to any other duties, fees, exactions, and charges applicable to such imported derivative aluminum articles or steel articles, shall apply to imports of derivative aluminum articles described in Annex I to this proclamation from all countries except Argentina, the Commonwealth of Australia (Australia), Canada, and the United Mexican States (Mexico) and to imports of derivative steel articles described in Annex II to this proclamation from all countries except Argentina, Australia, Brazil, Canada, Mexico, and South Korea.

Citing threat to national security, the Secretary of Commerce (Secretary) released an updated report with concerns over capacity utilization – domestic steel producers’ capacity needed to be above 80 percent. Although imports of aluminum articles and steel articles have declined since the imposition of the tariffs and quotas, imports of certain derivatives of aluminum articles and imports of certain derivatives of steel articles have significantly increased since the imposition of the tariffs and quotas.

The net effect of the increase of imports of these derivatives has been to erode the customer base for U.S. producers of aluminum and steel and undermine the purpose of the proclamations adjusting imports of aluminum and steel articles to remove the threatened impairment of the national security.

ANNEX I: DERIVATIVES OF ALUMINUM ARTICLES

ANNEX II: DERIVATIVES OF STEEL ARTICLES

TIMELINE OF STEEL AND ALUMINUM ACTION UNDER SECTION 232 OF THE TRADE EXPANSION ACT OF 1962:
  • January 11, 2018 – the Secretary presents investigation into the effect of imports of steel articles on the national security of the United States.
  • January 19, 2018 – the Secretary presents investigation into the effect of imports of aluminum articles on the national security of the United States.
  • March 8, 2018 – Proclamation 9704 (Adjusting Imports of Aluminum into the United States)
  • March 8, 2018 – Proclamation 9705 (Adjusting Imports of Steel into the United States)
  • March 23, 2018 – 25 percent ad valorem tariff on steel articles and 10 percent ad valorem tariff on aluminum articles imported from most countries.
  • May 31, 2018 – Proclamation 9758 (Adjusting Imports of Aluminum into the United States), further adjustment to imports of aluminum articles by imposing quotas on such articles from the Argentine Republic (Argentina).
  • April 30, 2018 – Proclamation 9740 (Adjusting Imports of Steel into the United States), adjust imports of steel articles by imposing quotas on such articles from the Republic of Korea (South Korea)
  • May 31, 2018 – Proclamation 9759 (Adjusting Imports of Steel into the United States), adjust imports of steel articles by imposing quotas on such articles from Argentina and the Republic of Brazil (Brazil).
WHAT ARE DERIVATIVES?

For purposes of this proclamation, the Secretary determined that an article is “derivative” of an aluminum article or steel article if all of the following conditions are present:

(a) the aluminum article or steel article represents, on average, two-thirds or more of the total cost of materials of the derivative article;
(b) import volumes of such derivative article increased year-to-year since June 1, 2018, following the imposition of the tariffs in Proclamation 9704 and Proclamation 9705, as amended by Proclamation 9739 and Proclamation 9740, respectively, in comparison to import volumes of such derivative article during the 2 preceding years; and
(c) import volumes of such derivative article following the imposition of the tariffs exceeded the 4 percent average increase in the total volume of goods imported into the United States during the same period since June 1, 2018.

It is the Secretary’s assessment that foreign producers of these derivative articles have increased shipments of such articles to the United States to circumvent the duties on aluminum articles and steel articles imposed in Proclamation 9704 and Proclamation 9705, and that imports of these derivative articles threaten to undermine the actions taken to address the risk to the national security of the United States found in Proclamation 9704 and Proclamation 9705.

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