Major Changes to the Section 232 Tariffs Just Before They Become Effective

Featured, Government Relations, Section 232, Trade Cases

The steel and aluminum tariffs went into effect at 12:01AM Eastern time this morning.

Last night, March 22, the President issued a new proclamation making major changes in the March 8 proclamation on steel and aluminum.

  • Country exemptions: Argentina, Australia, Brazil, Canada, European Union (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom), South Korea
  • As of May 1, 2018, tariffs apply to all countries, including Canada and Mexico,  pending further action
  • Amends the initial tariff proclamation to authorize the Commerce Department to issue product exclusions to a broader category of products. Specifically, “Such relief may be provided to directly affected parties on a party-by-party basis taking into account the regional availability of particular articles, the ability to transport articles within the United States, and any other factors as the Secretary deems appropriate.”
  • Product exclusions which are granted will now be retroactive to the date the exclusion request is posted for public comment.

Customs issued a notice at 11:40 PM last night notifying importers and brokers of these new requirements.

  • Country exemptions are effective only until May 1, 2018
  • Tariffs apply based on country of origin of the goods, not the country of export

The country exemptions are going to make some countries very unhappy. For example, a country like Turkey is increasingly isolated by the tariffs. Remaining countries are likely to take the issue to the World Trade Organization (WTO). Canada and Mexico will not be happy, as the indefinite exemption in the initial proclamation was changed into an exemption that expires on May 1st.  This will impact the NAFTA negotiations, which are already on shaky ground.  The proclamation adds even more uncertainty to the tariff process, and ensures that fights over the tariffs will face repeated battles over country exemptions.

Companies need to be aware of the timing of their shipments and make their best efforts to get products released from customs prior to the termination date of the country exemptions.

These last-minute major changes to the tariffs are unprecedented and may be subject to legal challenge.