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CPA Supports President’s Decision to End Temporary Steel/Aluminum Exemptions

May 31, 2018

Washington - The Coalition for a Prosperous America (CPA) supports the Trump administration’s decision to end temporary exemptions from Section 232 steel and aluminum tariffs for Canada, Mexico, and the European Union.

“We appreciate the work of President Trump, Trade Ambassador Robert Lighthizer, Commerce Secretary Wilbur Ross, and White House Trade Advisor Peter Navarro in finalizing the list of countries to which either tariffs or quotas will apply,” said Dan DiMicco, CPA Chairman. “They have adeptly navigated the path of protecting US national security interests as they engaged in negotiations with other countries.”

Prior to the 232 investigation, a series of anti-dumping and countervailing duty orders effectively prevented most Chinese steel from entering the US directly. China is notorious for its subsidized overproduction, transshipping through other countries, and deliberately mis-marking its product to circumvent trade laws. Other countries, including allies, have their own overcapacity, and have targeted the lucrative US market. As a result, the US produces less steel and aluminum, making it the only major steel-producing country that is a significant net importer.

“There are no countries with true exemptions,” said Michael Stumo, CEO of CPA. “All countries are subject to either tariff or quota restrictions. Some countries negotiated quota agreements with the US to avoid tariffs. They agreed to reduce their shipments to the US as compared to recent years.” 

“Other countries failed to achieve an agreement with the US, including Mexico, Canada, Japan, and the EU. They were granted temporary exemptions from tariffs during the negotiation period. But now they will be subject to 25 percent tariffs on steel and 10 percent on aluminum. Whether or not they are allies is not relevant to the fact that their oversupply is degrading US industrial capability.”

While the EU has announced an intent to impose retaliatory tariffs on certain US goods, this will not occur until (and unless) the WTO rules in their favor in the next one to two years. The WTO must find that the US was wrong in using national security as a justification for trade action, something the WTO has never ruled.

“The US is less import-dependent than any other industrial country,” added Stumo. “If the administration continues its course of rebuilding US production, other countries will have more to lose than we do in any trade conflict.”

 


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