Biden Administration to Lift Trump’s Tariff on Japanese Steel

February 9, 2022 by Dan McCue
Biden Administration to Lift Trump’s Tariff on Japanese Steel
Commerce Secretary Gina Raimondo testifies on Capitol Hill in Washington, Tuesday, Feb. 1, 2022. (AP Photo/Andrew Harnik, Pool)

WASHINGTON — The Biden administration has struck a deal with Japan to remove Trump-era tariffs from roughly 1.25 million metric ton of Japanese steel imports annually.

The new deal, which excludes aluminum, will take effect on April 1. In return for the lifting of the tariffs, Japan has promised to take “concrete” steps to reduce the current glut of excess steel manufacturing.

A joint statement issued by trade representatives of the two countries said that within six months Japan will adopt “appropriate domestic measures,” including antidumping, countervailing duty and safeguard measures to establish more market-oriented conditions for steel.

In 2018, the Trump administration imposed a 25% tariff on steel imports and a 10% tariff on aluminum imports from dozens of countries.

The announcement marks the second time the Biden administration has agreed to ease Section 232 tariffs imposed upon a longtime strategic ally by the Trump administration.

Last fall, the Biden administration announced it had reached a similar agreement on steel tariffs with the European Union. That agreement went into effect on Jan. 1.

Like the EU deal, the agreement with Japan calls for all of the steel it imports into the U.S. to be entirely produced in the country to qualify for duty-free access. The provision is intended to reduce the risk that Chinese steel might enter the country under the guise of a Japanese import.

“As part of our work to reinvigorate America’s manufacturing economy and bring down costs for consumers and businesses, President Biden directed us to renegotiate the 232 steel measures with Japan to allow duty-free imports into the United States,” said Commerce Secretary Gina Raimondo in announcing the deal.

She went on to say the agreement “will strengthen America’s steel industry and ensure its workforce stays competitive, while also providing more access to cheaper steel and addressing a major irritant between the United States and Japan, one of our most important allies.”

“This is a step towards a solution … but we will continue to strongly urge the United States to fully eliminate the tariff in a manner consistent with WTO rules,” Japanese industry minister, Koichi Hagiuda, said in a written statement.

Before the deal was announced, a number of U.S. steel industry executives had expressed fears that the White House might give Japan too much access to U.S. markets.

But on Monday the industry exhaled, relieved that the deal limits Japanese imports to about their two-year average from 2018 and 2019.

And unlike the deal with the European Union, which added past tariff exclusions to the trade bloc’s quotas, Japanese steel imported under past tariffs will count against Japan’s quota volumes.

“The Steel Manufacturers Association is pleased with this agreement,” said Philip Bell, the organization’s president, in a written statement.

“It shows that the U.S. government is committed to negotiating alternative schemes to the 232 tariffs on a case-by-case, country-by-country basis,” he said.

“We are particularly glad to see that exclusion-based imports of Japanese steel products will count against the quota volumes. In 2021, 58% of Japanese imports came to our shores as exclusions. This represents approximately 550,000 metric tons of steel products,” Bell continued.

“The melted and poured requirement will help prevent circumvention and transshipment of steel products and the inclusion of an adjustment mechanism will allow the flexibility needed to deal with changes in the global steel market,” he continued. “Overall, this is a strong deal for American steelmakers and it shows that we should not take a one size fits all approach when it comes to our jobs, environment and economic growth.”

Another group applauding the deal is the New Democrat Coalition.

In a joint statement, coalition Chair Suzan DelBene, D-Wash., Vice Chair for Policy Scott Peters, D-Calif., and Trade Task Force Co-Chairs Ron Kind, D-Wis., and Lizzie Fletcher, D-Texas, said they welcome word of the agreement and look forward “to further progress to roll-back Trump era Section 232 tariffs on steel and aluminum imports from other allies and close trading partners.”

“Eliminating these tariffs will provide relief for domestic manufacturers and consumers at a time when prices are rising for American families,” the statement continued. “New Dems are committed to reclaiming American leadership of the global rules-based trading system, lowering costs for families and promoting American manufacturers, workers, farmers, and ranchers abroad.

“We look forward to working with President Biden, Secretary Raimondo, and Ambassador Tai to continue moving away from the misguided trade policies of the Trump administration so we can further support American businesses and consumers,” the coalition leaders said.

U.S. Trade Representative Katharine Tai said the Biden administration has been committed “since day one” to work with allies and partners to address shared challenges.

“In reaching this agreement with Japan, one of our most important trading partners, we are taking another step forward in our mission to rebuild and revitalize these important relationships,” Tai said.

“This agreement, combined with last year’s resolution with the European Union, will help us work together with Japan to combat China’s anti-competitive, non-market trade actions in the steel sector, while helping us reach President Biden’s ambitious global climate agenda,” she continued.

“Importantly, this agreement represents an important example of our worker-centered trade policy in action. It will defend opportunities for a vital American industry, our workers, and their families as we work to deliver trade policies that can unlock broad-based economic prosperity and growth,” Tai said.

Dan can be reached at [email protected] and at https://twitter.com/DanMcCue.

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