New Section 232 Tariffs Imposed on Derivative Steel and Aluminum Articles

On January 29, 2020, the Administration published Presidential Proclamation 9980 announcing that it would impose new tariffs on imports of certain derivative steel and aluminum articles. The tariff rates will be 25 percent on the steel derivatives and 10 percent on the aluminum derivatives, and will become effective February 8.

This action expands the scope of tariffs on steel and aluminum imports that were first imposed in March 2018 pursuant to national security investigations under Section 232 of the Trade Expansion Act of 1962. According to the Administration, imposing these tariffs on derivative articles is “necessary and appropriate” to address circumvention that is undermining the effectiveness of the March 2018 proclamations, and to remove the threatened impairment of the national security of the United States. The newest proclamation states that, due to an increase in imports of derivative articles, domestic producers have been unable to reach or stabilize at the 80 percent capacity utilization rate recommended by the Department of Commerce’s reports on steel and aluminum. Extending the Section 232 tariffs to downstream derivative products on this basis is a significant development.

For purposes of this proclamation, a “derivative” article must meet three criteria: (a) aluminum or steel represents two-thirds or more of the total cost of materials of the derivative article, (b) import volumes of the derivative article increased since June 1, 2018 compared to the two preceding years, and (c) the increase in import volumes since June 1, 2018 exceeded the 4 percent average increase in overall U.S. imports during the same period.

Country exemptions from Section 232 steel and aluminum tariffs continue to apply. Exempted from this action are derivative steel articles from Argentina, Australia, Brazil, Canada, Mexico, and South Korea, and derivative aluminum articles from Argentina, Australia, Canada, and Mexico. In the event of a surge in imports of any derivative article from an exempted country, however, the proclamation authorizes the Department of Commerce, with the Office of the United States Trade Representative (USTR), to extend these tariffs to or adopt quotas for the exempted country, or to negotiate voluntary agreements with such country.

The proclamation indicates that relief shall be provided pursuant to a product exclusion request for imports of derivative articles not available in the United States or for specific national security considerations. The Department of Commerce, which has been administering product-specific exclusions from steel and aluminum tariffs since the March 2018 proclamations, may announce exclusion request procedures pertaining to derivative articles in the coming days.

The specific derivative articles affected by this action are listed in Annex I (aluminum) and Annex II (steel) to the proclamation, and are summarized below.

Derivative Aluminum Articles:

 Derivative Steel Articles:

A number of Covington trade lawyers have been advising a wide range of clients with regard to the Section 232 actions, and we would be pleased to assist you as well. If you have any questions concerning the information in this alert, please contact the following members of our International Trade practice.