In March last year, when U.S. announced trade restrictions in the form of high import tariffs of 25% and 10% on steel and aluminium respectively, the trade dynamics changed globally. In retaliation to U.S.’s move, the key steel producing and consuming nations European Union, Mexico, Canada and India also imposed various restrictions on their steel import. These countries also feared that the entry barriers by U.S. would result in steel oversupply in the rest of the markets thus hurting their domestic steel industry. Thus, over the time period of one year let us see what kind of trade barriers the above mentioned countries have imposed on their steel imports.
EU has imposed quotas on steel imports
With effect from 1 Feb’19, steel imports in to EU are subject to quotas. The measures concern 26 steel product categories, with quotas set at the average of imports over the period 2015-2017, plus 5%. Once these quotas are filled, 25% tariffs apply on further imports. These quotas have replaced the provisional measures imposed by EU in July las year (2018).
The new measures should remain in place for up to three years i.e. till July 2021, but can be reviewed in case of changed circumstances. The quotas should also rise by 5% from 1 July, 2019, and again by the same amount a year later, subject to reviews.
The EU will exclude some developing nations, South Africa and the countries of the European Economic Area, notably Norway, from its quotas. The main exporters of steel to the EU are China, India, Russia, South Korea, Turkey and Ukraine.
Canada imposed provisional safeguard measures
In response to U.S. Steel import tariffs, on October 25, 2018, Canada imposed provisional safeguard measures on imports of seven categories of steel products (heavy plate, concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire and wire rod), with exemptions for certain countries. These provisional safeguard measures take the form of tariff rate quotas (TRQs), with a 25% surtax on imports outside of quota. The provisional safeguards apply to imports of these products for 200 days until May 13, 2019.
These quotas and tariffs affected countries such as China and Turkey that were key steel exporters to Mexico, but not Canadian steel imports from the U.S., which are already subject to other duties. While Mexico is partially exempted, Chile, Israel and some developing countries are completely exempted from these quotas.
Under the CITT Act (Canadian International Trade Tribunal), safeguard measures can be imposed for up to four years with one renewal, for a maximum of 8 years (including any period in which provisional safeguards were in effect).
Mexico extended safeguard duty on steel imports
Mexico has renewed 15% safeguard duty on steel imports from countries with which it doesn’t have free trade agreements. The safeguard measure was first put in place in October 2015 and was subsequently renewed every six months but the current government allowed it to lapse on 1 Feb’19.
However, the government renewed the safeguard measure on 26 Feb’19, explaining that it would take effect in the ongoing week and apply to the same 186 steel products as before. These measures will be once again valid for another six months.
India drops plan to impose MIP
Imports of various grades of steel into India rose by around 8% in the April-December 2018 period, compared with a year earlier, according to Customs data. During the same period, exports from India fell by more than 17%, making the country a net importer of steel, mainly because the U.S., one of India’s biggest markets, imposed additional duties last year on steel coming from some Asian countries, including India. As a result, the nation’s steel imports from countries such as Japan, South Korea and Indonesia surged. Chinese imports also climbed in the final quarter of 2018.
Amid fears that the trade disputes and a global economic slowdown divert surplus Asian steel stocks to India, Indian steel firms had put pressure on the government to restrict imports into the country by either imposition of higher duties on or by imposition of Minimum Import Price (MIP) on steel. MIP is usually a floor price fixed by the government below which imports in to the country would not be allowed.
However, the Indian Steel Ministry has junked the proposal to levy Minimum Import Price on steel on the grounds that domestic prices of the commodity have recovered.
In a bid to support use of locally made steel, the ministry has urged automakers to cut imports from Japan and Korea. India has already imposed stricter quality controls on more than 85% of steel products and it is expanding the list of locally made steel that must be used in government infrastructure projects.
Apart from the above mentioned countries that have made changes in their trade policies after the imposition of high tariffs on steel imports by U.S., other countries like Korea, Japan, Malaysia, Thailand, Indonesia, Vietnam, and Egypt have also increased the trade barriers in the form of anti-dumping or countervailing duty on different steel products, thus completely changing the trade dynamics of global steel industry.
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