The Trump government on Thursday officially announced steep tariffs on aluminium and steel imports under Section 232, clearing government intentions to protect domestic industry from the influx of cheap imports. The import tariffs for steel is fixed at 25% while for aluminium it is at 10%.
Canada and Mexico exempted from import tariffs
Although these import tariffs have been imposed on all the countries including Europe and China, the government has currently exempted Mexico and Canada from the import tariffs under NAFTA (North American Free Trade Agreement).
The new tariffs on imports will take effect in 15 days exempting Canada and Mexico indefinitely. While currently there is no timetable, the exemptions for Canada and Mexico “are not open-ended” and will depend on whether changes are made to NAFTA that satisfy Trump, informed government officials.
It has been hinted by the U.S. government that determining further exceptions will depend on whether other countries can convince Trump that there are “satisfactory alternative means” for resolving trade inequities.
Everything about Section 232
In April 2017, The U.S. Secretary of Commerce initiated the Section 232 investigation on steel imports (under Trade Expansion Act, 1962) on April 19, 2017. Section 232 investigations are initiated to determine the effects of imports of any articles on U.S. national security. In this case, the Commerce Department initiated an investigation to determine the effect of steel imports on the national security as steel is used in a variety of commercial, infrastructure and defence applications.
The investigation on steel imports had been initiated in the light of large volumes of excess global steel production and capacity. According to reports in 2016, the overall U.S. capacity utilization was 71% against 77.5% utilisation in 2014. In Mar’17 the U.S.’s steel imports were found to be 34% higher against the imports in 2016.
While the domestic steel manufacturers in the U.S. are happy with the government’s decision as this decision will definitely help the domestic players to increase their products sales and improve margins, the end user manufacturing industry are quite disappointed by this announcement.
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