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232 report said likely on hold until after G-20

Jun 30, 2017 | 01:55 PM | Chicago | Michael Cowden

Tags  Section 232, Commerce Department, Donald Trump, G-20, imports, steel, Michael Cowden

The US Commerce Department will probably delay issuing its findings in a Section 232 investigation into steel imports until after the Group of 20 (G-20) meeting in Germany, starting July 7, sources familiar with the matter said.

That means the department probably won’t formally decide whether imports pose a threat to national security, or recommend remedies to curtail them, until the week of July 10, one source predicted.

“Clearly no. Nothing is coming until after the G-20,” a Washington source commented when asked whether a report might be issued late on June 30.

A Commerce spokesman did not respond to AMM’s request for comment on the timeline of the 232.

Nonetheless, steel remains at the vanguard of the Trump administration's trade policy, and what the administration decides to do regarding steel imports will likely provide a taste of what’s to come not only for aluminum—for which a separate 232 probe has been launched—but also for other products, the Washington source said.

Still, questions remain about the scope of the case, including whether it could cover semi-finished goods or allow for exemptions by product or country. “We have received no clear guidance,” one trade attorney source told AMM. “When you ask people involved in the investigation what the scope is, they simply say ‘steel.’”

The administration will likely use the 232s as a catalyst for discussions at the G-20 about the problem of global “overproduction,” the Washington source said. The threat of action on the 232 could be used to ratchet up pressure on other countries to address the issue more swiftly, he said.

Commerce is increasingly using the term “overproduction” instead of “overcapacity,” because while many countries have too much steelmaking capacity, some have done more than others to keep such excess and unprofitable capacity idle.

The June 30 deadline also may have slipped because the administration may still be debating which remedy is best, a second Washington source said. Quotas alone are almost certainly off the table, and discussions probably now center on whether to go with a broad-based tariff or a mix of quotas and tariffs.

Commerce has proposed imposing volumes quotas on imports, setting tariffs or establishing a system that utilizes both.

Tariffs on steel imports are rumored to be set at 25%, a figure favored by President Donald Trump, perhaps over the objections of his cabinet, the trade attorney said.

That amount, which would come on top of any existing anti-dumping and countervailing duties, would benefit US mills more than the other measures, the second Washington source said. “Anyone who knows how to run a steel mill would make money.” And they have the added advantage of being easy to sell to both Trump and his base, he said.

The hybrid mechanism—in which tariffs would kick in after a volume threshold was reached—might not appeal to Trump because they are more complicated and would require more resources to implement. However, it would be less disruptive to steel consumers and to US allies and trading partners, the second  source noted.

Some market participants and Washington sources have criticized the administration for repeatedly telegraphing that a decision in the steel 232 would be reached by the end of June, only to miss that self-imposed deadline.

Still, Trump would have risked being a pariah at the G-20 summit if he had rolled out big tariffs after leaving the global Paris Agreement under the United Nations Framework Convention on Climate Change—an unpopular move globally—and that may have played into the delay as well, the second source said.


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