On March 8, President Donald Trump signed orders to impose tariffs on steel and aluminum imported in the United States. The tariffs, which will take effect in 15 days, are set at 25 percent for steel and 10 percent for aluminum. As the orders state:
Covered “steel articles” are those defined in the Harmonized Tariff Schedule (HTS) 6-digit level as: 7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90, including any subsequent revisions to these HTS classifications.
Covered “aluminum articles” are defined in the HTS as: (a) unwrought aluminum (HTS 7601); (b) aluminum bars, rods, and profiles (HTS 7604); (c) aluminum wire (HTS 7605); (d) aluminum plate, sheet, strip, and foil (flat rolled products) (HTS 7606 and 7607); (e) aluminum tubes and pipes and tube and pipe fitting (HTS 7608 and 7609); and (f) aluminum castings and forgings (HTS 7622.214.171.124 and 76126.96.36.199), including any subsequent revisions to these HTS classifications.
As its members may recall, MSCI submitted written testimony to the U.S. Commerce Department in its Section 232 steel investigation in May 2017. MSCI submitted testimony with regard to aluminum in June 2017. The steel testimony is here and the aluminum testimony is here.
Both submissions argued the U.S. metals sector has been harmed by unfair trading practices. However, MSCI focused on China as the main culprit and the driving force behind oversupply in general. MSCI made it clear it did not believe trading partners like Canada and Mexico should be penalized. When President Trump previewed his policy on March 1, it did not appear he would exempt the United States trading partners from his penalties. MSCI is encouraged that, in the intervening week, the president rethought that position. In carving out Mexico and Canada, the president exempted 26 percent of all steel imports and 40 percent of all aluminum imports into the United States.
Not only are Canada and Mexico now exempt from the tariffs, the president has encouraged all American allies to come to the administration to discuss alternative paths that will honor the U.S.’s trading relationships and address concerns about the health of the U.S. steel and aluminum sectors.
In a statement released to the media, MSCI President and CEO M. Robert Weidner, III argued the United States enjoys a substantial and beneficial metals trading relationship with Canada and Mexico. Weidner reiterated that, from the start of the administration’s Section 232 investigations, MSCI has advocated that the Trump administration target penalties toward non-market countries like China, which have routinely and flagrantly thwarted international and U.S. trade laws.
In its testimony last year, MSCI also focused on circumvention. President Trump’s tariffs do not address this problem, which is why, in its press statement MSCI asked that the administration consider how these penalties will affect the entire industrial metals supply chain.
Both orders authorize the creation of a process to exclude products from the tariffs for availability or national security reasons. The president required the Secretary of Commerce to issue procedures for that process by March 18. MSCI will monitor these recommendations and would appreciate its members’ input as we move forward. The secretaries of Commerce, State, Treasury and Defense, the United States Trade Representative, the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, and such other senior Executive Branch officials as the Commerce Secretary deems appropriate will make the product exclusion decisions.
MSCI’s mission is to foster healthy supply and healthy demand. While it is pleased with the president’s focus on steel and aluminum, it will continue to advocate for fair and free trade across the entire industrial metals supply chain.