According to the market reports, on Wednesday Trump government has signed a proclamation allowing relief from the quotas on steel and aluminium coming from South Korea, Brazil and Argentina and on aluminium from Argentina.
As per the statement released by the U.S. Department of Commerce, “Companies can apply for product exclusions based on insufficient quantity or quality available from U.S. steel or aluminium producers. In such cases, an exclusion from the quota may be granted and no tariff would be owed.” This is definitely a good news for the exporters in the above mentioned three countries and also for the end user industries in U.S.
Washington has come under pressure from U.S. companies complaining of supply shortage in the key manufacturing material due to the import restrictions. The exemption only applies to companies based in the U.S. and needs to be cleared by the Commerce Department.
In March 2018, Trump government has placed 25% and 10% tariffs on steel and aluminium imports citing national security reasons following which an arrangement was arrived at in which South Korea was allowed a quota of 70% of average steel exports to the U.S. in the years 2015 to 2017.
Whereas in case of Brazil, country’s semi-finished steel exports to the United States were subject to quotas based on the average for the three years from 2015-2017, while finished steel products will be limited to a quota of 70% of the average for those years. For Argentina Trump had permanently suspended steel and aluminium tariffs with effect from May’18.
Out of the total steel imports of U.S. in 2017, Canada accounted for largest share of U.S. imports at 17% followed by Brazil at 15%. South Korea accounts for 10% of U.S. total steel imports whereas Argentina is not in the U.S.’s list of top ten steel exporters.
The other two countries Canada and Mexico both are also trying hard to negotiate with U.S. to permanently remove the metal tariffs under the revised NAFTA (North American Free Trade Agreement) deal which allows tariff-free trade between three countries Canada, Mexico, and U.S.
The import tariffs announced by Trump government have brought cheer to the domestic steel industry as according to the U.S. Customs data, in first seven months (Jan to Jul) of 2018, the country’s domestic steel imports have declined by 10% y-o-y basis to 20.9 MnT.
The biggest offshore suppliers to U.S. for the first seven months were South Korea with 1,932,000 tonnes (down 15% year over year), Japan with 873,000 tonnes (down 7%), Germany with 758,000 tonnes (up 1%), Turkey with 721,000 tonnes (down 58%) and Taiwan with 659,000 tonnes (down 16%).
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