US President Donald Trump’s announcement Monday that the US would begin to enforce Section 232 tariffs on steel and aluminum imports from Brazil and Argentina had not been made official by the White House as of Thursday.
In a tweet, Trump said the tariffs were to take effect immediately; however, in order for the president to make changes to the established quotas or tariffs it would require the issuance of a presidential proclamation, but as of Thursday afternoon nothing has been put out by the White House. The White House did not respond to requests for comment.
The Trump administration imposed a blanket 25% tariff on all steel imports, and of 10% on all aluminum imports, in March 2018 under Section 232 legislation, alleging that these imports posed a security risk to the US economy. In June 2018, the restrictions on Brazil and Argentinian steel and aluminum were converted to a quota system.
Further clouding the outlook for the tariff hike is a recent decision by the US Court of International Trade. In a court decision dated November 15, the CIT denied a motion filed by the US government to dismiss a case challenging Trump’s August 2018 decision to double Turkey’s steel tariff from 25% to 50% under Section 232.
The US has argued that the president retains the power to modify any action taken under Section 232 at any time, however the court noted there is an established time line under the Section 232 statute in which these decision should be issued. Under Section 232, the president has 90 days to issue a decision on tariffs after receiving the 232 report from Congress and a further 15 days to implement any trade actions. Commerce’s Section 232 reports on steel and aluminum were submitted to Trump in early 2018.
The uncertainty around the tariffs, particularly on shipments from Brazil, is being closely watched by steel market participants, particularly in the US flat-rolled market.
“Brazil sells about 4 million tons of slabs annually in the US market without any tariffs,” a trader said. “Brazilian slab prices have critical importance as US mills are able to keep their downstream products prices lower and they almost serve as a benchmark for the other slab importers’ pricing. Increasing prices for slab imports will most likely push US sheets prices higher.”
At an industry event this week, the tariffs on Brazil were a hot topic, as attendees said there are vessels on the water currently bringing slab from Brazil and large orders have already been placed for February and March that may end up being cancelled should the tariffs take effect.
“Brazilian slabs have been the cheapest in the market and it will be tough for any mill to replace it without pushing their costs higher,” a Midwest service center source said.
— Justine Coyne, firstname.lastname@example.org
— Edited by Richard Rubin, email@example.com