Pipe Producers Object to Removal of Section 232 Tariffs as Part of USMCA Ratification

The U.S. should keep in place the Section 232 tariffs on aluminum and steel from both Mexico and Canada even if it impedes movement on the U.S.-Mexico-Canada Agreement, the American Line Pipe Producers Association said in a news release. The group, a coalition of large-diameter welded pipe (LDWP) producers, took issue with recent United Steelworkers calls for the removal of the tariffs before any USMCA ratification (see 1903250035). "While ALPPA supports the USMCA, it strongly rejects that USMCA should be tied to removal of Section 232 tariffs, particularly given the trade-distortive practices of Canada and Mexico," the group said.

ALPPA said it is "imperative that Section 232 tariffs relief be maintained on both Canada and Mexico in order to uphold the President's goal of increasing U.S. steel capacity." Any removal of the tariffs "should be replaced by a quota to ensure that U.S. national security is protected, and that Section 232 relief benefits U.S. companies and workers, including USW workers," it said. "Such a quota should be well below the 2016 to 2018 average volumes for U.S. imports from Canada –- any quota set at historic levels would improperly reward Canada for its surge of LDWP imports at dumped prices.

Meanwhile, North American aluminum groups wrote to the presidents of the USMCA countries asking that the Section 232 tariffs on aluminum be ended prior to the deal's ratification. "The new USMCA cannot work as intended without reinstating exemptions for Canada and Mexico from the 232 tariffs," said The Aluminum Association, the Aluminium Association of Canada and Instituto Mexicano del Aluminio in the March 26 letter. Replacing the tariffs with a quota would also cause problems within the aluminum industry, the group said. "A quota on aluminum imports in North America would be highly detrimental," the group said. "If there is a quota system for aluminum trade within North America, it will be difficult to ensure that downstream manufacturers of aluminum products will have access to the aluminum inputs they need."

A quota system may mean that goods get "stuck on one side of the border when the quota has been filled," the groups said. "To avoid shortages, companies may be forced to stockpile the metal, tying up capital that could be used to pay employees or upgrade equipment and exacerbating the impact of a quota system." Tariffs or quotas on Mexico and Canada don't address the real issue of subsidized aluminum from China, the groups said. "Our respective governments recognize the need to protect against transshipment and continue to pursue effective trade remedies and robust enforcement. We believe that active monitoring and continued cooperation on this front will limit the ability of China to send unfairly subsidized aluminum into our shared market and address the national security concerns raised by the Section 232 on aluminum imports."