Tariffs still in the works for Chinese steel, aluminum

The U.S. Department of Commerce and the U.S. Trade Representative continue to work on trying to determine what material should be hit with tariffs meant to target steel and aluminum originating in China. Olivier Le Moal/iStock/Getty Images Plus

Recent tariffs changes proposed by President Joe Biden’s administration constitute one win and one loss for steel product fabricators who import steel from China.

Biden announced in May an increase of 7.5% on Chinese tariffs, but recently he showed interest in boosting a key tariff rate on Chinese steel and aluminum products to 25%. That would be in addition to the 25% and 10% tariffs already on steel and aluminum, respectively, imposed by former President Donald Trump in 2018 on certain countries, including China.

However, the news of Biden declining to run for a second term has created an uncertain future for those new Chinese steel and aluminum tariffs.

Meanwhile, the U.S. Trade Representative has been taking comments from both steel users and producers as to what kinds of steel products, if any, should be excluded from the new Biden Chinese steel tariffs. Until formal changes are announced, administration officials are pushing forward with previously announced intentions.

During this time for public statements, domestic steelmakers and representatives of steel consumers have raised issues. In the first case, domestic producers have argued that any increase in Chinese tariffs will be essentially worthless unless the U.S. forces Mexico, whose steel enters the U.S. duty free, to take action against companies that use Chinese steel and then send fabrications derived from that imported metal to the U.S., avoiding the tariffs.

On July 10, the Biden administration announced a new agreement with Mexico that requires Mexico to label steel of Chinese origin as having been “melted and poured” in China. China-sourced steel now is subjected to additional Mexican tariffs, which ultimately could affect the steel’s price for some U.S. consumers.

Additionally, the same agreement calls for aluminum from China to be labeled by Mexico as to where it was “smelt and cast.” If it was smelt and cast in China, aluminum imports to the U.S. from Mexico face the higher tariffs.

The American Iron and Steel Institute (AISI) worries about loopholes in that agreement.

“But this reform can only be effective if Mexico ensures that accurate and complete information on the country of melt and pour of its steel imports and exports is collected and made available to U.S. officials,” stated AISI President and CEO Kevin Dempsey. “We urge the U.S. government to continue to press for additional actions to address the many schemes by steel traders to circumvent and evade U.S. trade laws, and to ensure this new arrangement is vigorously and fully enforced.”

In the meantime, some metal fabricators have told the U.S. Department of Commerce (DOC), which is determining exclusions, that while higher Chinese tariffs on some steel may be warranted, they should not be imposed on steel exported by small, privately held companies outside of the purview of China’s network of large, state-owned or subsidized enterprises.

The DOC, which also administers the antidumping duty and countervailing duty laws, appears to be sympathetic to that idea generally based on its new proposed rule. If rulemaking is approved, material from these Chinese companies would be exempt from any tariffs. China is the dominant nonmarket economy in the world.

The Environmental Protection Agency (EPA) has another industrial chemical in its regulatory crosshairs, and machine shops will take a hit.

N-Methylpyrrolidone (NMP) was one of 10 chemicals highlighted by the 2016 Frank R. Lautenberg Chemical Safety for the 21st Century Act. That law granted the EPA expanded regulatory jurisdiction under the Toxic Substances Control Act of 1976 so that it could evaluate and address unreasonable risk from chemicals currently in commerce.

NMP is used widely in solvents, adhesives, and other industrial products. For the most part, the EPA is mandating skin protection in workplaces where the chemical is present.

Among the NAICS codes expected to be affected, according to the EPA, are machine shops; turned product; and screw, nut, and bolt manufacturing (NAICS Code 332700); metal coating, engraving (except jewelry and silverware), and allied services to manufacturers (NAICS Code 332812); motor vehicle parts manufacturing (NAICS Code 336300); and household appliance manufacturing (NAICS Code 335200).

But in five occupational areas, the agency wants to ban use of NMP completely. Two of those five areas—metal finishing and lubricants—will affect some if not many metalworking facilities.