Chinese steel and aluminum tariffs could increase

Dan Swartz
| 4/25/2024
Chinese steel and aluminum tariffs could increase
In summary
  • The Biden administration calls for tariffs to triple on imported Chinese steel and aluminum.
  • Immediate action is not likely, but the call for increased tariffs might signal a tougher stance on trade policy toward China.
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On April 17, the White House released a fact sheet, “Biden-⁠Harris Administration Announces New Actions to Protect U.S. Steel and Shipbuilding Industry From China’s Unfair Practices,” that includes a call to triple Section 301 tariffs on Chinese steel and aluminum to address China’s unfair trade practices in these areas. According to the fact sheet, the administration believes, “China’s overcapacity and non-market investments in the steel and aluminum industries mean high-quality U.S. products have to compete with artificially low-priced alternatives produced with higher carbon emissions.”

The announcement is in response to a March petition to the Office of the United States Trade Representative (USTR) from the United Steel Workers and four other labor unions expressing concern about “unreasonable and discriminatory acts, policies, and practices of the People’s Republic of China to dominate the maritime, logistics, and shipbuilding sector that burden or restrict U.S. Commerce.”

Background

In 2018, the Trump administration imposed Section 301 tariffs on Chinese-originating imported steel and aluminum to protect domestic industry from unfair trade practices by China. On average, the Section 301 tariffs on Chinese-originating imported steel and aluminum are 7.5% ad valorem. The Section 301 tariff is in addition to the Section 232 tariffs imposed by the Trump administration on the basis of national security concerns, which placed a 25% ad valorem tariff on imported steel and a 10% ad valorem tariff on imported aluminum. Steel and aluminum also are subject to varying most-favored nation (MFN) tariff rates based on the tariff classification of the subject goods.

Request to increase the Section 301 tariffs

President Joe Biden’s announcement requests that the USTR triple the tariff rate under Section 301. The announcement also calls on the USTR to:

  • Work with Mexico and other countries to prevent China from evading U.S. tariffs by importing its steel and aluminum through intermediate countries
  • Block the proposed sale of U.S. Steel to Japanese-owned Nippon Steel to keep U.S. Steel domestically owned and operated

Crowe observation

The USTR is expected to conclude a four-year statutory review of Section 301 tariffs on Chinese-originating goods in the coming weeks. Thus, action on the Biden administration’s request is not expected to be imminent.

Looking ahead

The administration’s announcement appears to signal a hardening in U.S. trade policy posture toward China. Although it is unlikely for the USTR to take immediate action on President Biden’s request, changes could be on the horizon. Businesses should keep abreast of current developments and work with advisers to understand how these changes could affect them.

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Dan Swartz
Dan Swartz
Principal, Tax