Prices of imported metals could see increase for manufacturers

U.S. companies that have relied on steel imports from Europe could see prices increasing as talks between the U.S. and the European Union have concluded without extending the most recent tariff rate quota agreement. Slobodan Miljevic/iStock/Getty Images Plus

The Biden administration is juggling a number of steel and aluminum import issues, and the ultimate outcomes will greatly affect the prices U.S fabricators pay for raw material.

The 2021 U.S.-European Union tariff rate quota agreement was supposed to be renewed at the end of October, but a meeting in Washington last month between President Joe Biden and European Commission President Ursula von der Leyen failed to reach an extension, much less a broader agreement.

Meanwhile, this occurred against the backdrop of head butting between steel and aluminum importers and U.S. producers who have been vocal about their delineated differences on proposed U.S. Department of Commerce (DOC) changes to the steel and aluminum tariff exclusion process. Additionally, domestic aluminum extrusion manufacturers filed a huge trade case on Oct. 4 asking for import penalties on a variety of imports, such as auto roof parts and solar panel framing. The countries being targeted for antidumping duties include Colombia, the Dominican Republic, Ecuador, India, Indonesia, Italy, Malaysia, Mexico, China, South Korea, Taiwan, Thailand, Turkey, the United Arab Emirates, and Vietnam. Estimates on the monetary value of aluminum extrusions imported from these countries is said to be around $3.19 billion in 2022.

The failure of the U.S. and the EU to reach a new steel and aluminum tariff agreement—which poses potential problems for importers—elevates the DOC’s most recent effort to adjust the tariffs the Trump administration imposed in 2018. The agency’s Bureau of Industry and Security (BIS) was looking to make it more difficult for steel and aluminum importers to avoid paying tariffs with a series of proposed changes to the tariff relief process. Both steel-importing manufacturers and the domestic steel producers are arguing in opposite directions against the BIS proposed changes.

As it stands now, steel and aluminum imports from the EU that are below certain levels have not been subject to the 25% steel tariff and the 10% aluminum tariff enacted in 2018. But the 2021 U.S.-EU temporary tariff rate quota agreement expired in October, at which time the two trade partners were supposed to come to a final agreement containing measures to ratchet back overcapacity of steel internationally and penalize steel manufacturers for carbon emissions during production. The EU has a plan to start down this environmentally friendly path in 2026, and it is expected to bite U.S. steel and aluminum manufacturers.

Although most importers of EU steel and aluminum currently are not paying the tariffs because of the 2021 agreement, those same companies are paying those tariffs on imports from many other countries, unless they win a tariff exclusion from the BIS, which has altered the exclusion process a number of times over the past five years. The most recent proposed rule in August ignited a bitter fight between steel and aluminum importers and U.S. metals producers.

Importer groups, such as the American Metals Supply Chain Institute, are unhappy with the BIS proposal, particularly the creation of a new category called general denied exclusions (GDEs), or automatic denials of importer exclusion requests for Harmonized Tariff Schedule of the U.S. classification codes that “have very high rates of successful, substantiated objections.” The AMSCI argues that “[s]uch blanket denials of exclusions would evade administrative review and run counter to the goals of the Section 232 exclusion process for several reasons.”

On the other side of the argument, the American Iron and Steel Institute wants the BIS to make it as hard as possible for importers to get an exclusion, in part because, besides the EU, the U.S. has tariff rate quota-type agreements with Korea, Brazil, and Argentina. Also, all imported steel from Australia, Canada, and Mexico is fully exempt from the Section 232 tariffs. For that reason, the AISI supports the proposed new certification standards requiring parties requesting exclusions to have first made reasonable efforts to source the product from the U.S. and then, if unavailable domestically, from a country eligible to export the steel to the U.S. free of the Section 232 tariff.

The Specialty Steel Industry of North America wants the BIS to explicitly state that the reasonable efforts standard should specify that an importer looking for an exclusion must make inquiries with at least three potential suppliers in the U.S. and at least two potential suppliers in each satisfactory alternative country.

“This requirement could be and likely will be very challenging for small and medium-sized U.S. businesses,” said a statement from the North American Association of Food Equipment Manufacturers.