A Trade War on the Horizon?

In recent weeks several TSI Global Consulting clients operating in sectors ranging from strategic alloys to aerospace parts have expressed concern over the new protectionist trade policies of the Trump Administration. While the shift away from free trade towards a more domestic “America First” trade policy agenda should come as no surprise to those who have followed Trump’s rhetoric on trade prior to and following the election, recent policy actions do indicate a ratcheting up of commercial risk as rhetoric turns to action. To date, the only new United States tariffs that have been fully implemented as part of this current friction are the steel (additional 25% ad valorem) and aluminum (additional 10% ad valorem) tariffs implemented by the Trump Administration as part of the Presidential Proclamation(s) on Adjusting Imports of Steel and Aluminum into the United States issued on March 8th. These tariffs came into effect as of 12:01 A.M. on March 23, 2018 and cover imports of steel articles defined by Harmonized Tariff Schedule numbers:

7206.10-7206.50; 7216.99-7301.10, 7302.10, 7302.40-7302.90 and 7304.10-7306.90.

The aluminum tariffs which also came into effect on March 23rd cover unwrought aluminum (HTS 7601), aluminum bars, rods and profiles (HTS 7604), aluminum wire (HTS 7605), aluminum plate, sheet, strip and foil (flat rolled products)[HTS 7608 and 7609] and aluminum castings and forgings (HTS 7616.99.51.60 and 7616.99.51.70).

U.S. Customs and Border Patrol has posted guidance on how to file/report the entry summary for imports of steel and aluminum products subject to these new duties. For steel products, in addition to the Chapters 72 and 73 HTS classification for the imported merchandise, importers are required to report a 9903.80.01 (25% ad valorem additional duty for steel mill products) and for aluminum products importers must report the additional duty as 9903.85.01 (10% ad valorem additional duty) on the import summary.

For the period March 23-April 30th 2018 the new duties on steel and aluminum are applied to imports from all countries except Canada, Mexico, Australia, Argentina, South Korea, Brazil and members of the European Union.

Effective May 1, 2018 there will be NO Country Exceptions for Imports of steel and aluminum products subject to these new duties.

In response to the steel and aluminum tariffs, China, which is the primary target of the Trump Administration’s protectionist sentiment, announced new tariffs (implemented on April 9, 2018) on $3 billion dollars of US origin products covering a range of 128 products mainly in the agricultural sector. The U.S. has upped the ante by proposing a massive $100 billion dollars worth of new tariffs on China (i.e. an additional 25% ad valorem tariff on 1300 categories of Chinese origin products). While the Office of the US Trade Representative has drawn up and published the list of products to be subject to the new tariffs, discussions to avoid what clearly appears to be an unprecedented war on the horizon are underway.  We will continue to monitor the current trade friction and provide regular updates as warranted.

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