US Reaches Deal With Japan Over Section 232 Steel Tariffs

The Biden administration will allow 1.25 million metric tons of steel to enter under a tariff rate quota, it said Feb. 7, as long as those products are melted and poured in Japan. That would be more than the U.S. imported from Japan in 2019 and 2020, and more than last year -- preliminary data says that the U.S. imported about 989,000 metric tons of steel from Japan in 2021.

The TRQ will be administered under 54 product categories and allocated in line with the 2018-2019 historical period, the Commerce Department said, and current exclusions will not apply to the quota. Imports of derivative articles of steel will not be subject to the 25% tariff. The quota will be administered quarterly, but up to 4% of the unused quota can roll over to future quarters.

The aggregate threshold is less than was imported in 2018, when the volume was almost 1.4 million metric tons. Section 232 tariffs were imposed in February 2018. In the last full year before the tariffs, Japan exported more than 1.7 million metric tons of steel to the U.S.

In the last month, steel interests had purchased advertisements on the Washington Post website arguing that Japan should not get a Section 232 tariff rate quota arrangement similar to Europe's, because they said Japan is a contributor to global overcapacity, and they argued that Japan makes dirty steel.

After the announcement Feb. 7, American Iron and Steel Institute CEO Kevin Dempsey said: “We thank [Commerce] Secretary [Gina] Raimondo and Ambassador [U.S. Trade Representative Katherine] Tai for ensuring that, as the United States and Japan seek to expand their cooperation on addressing global steel excess capacity and related trade and customs enforcement matters, a tariff-rate quota (TRQ) on steel imports from Japan will be established under Section 232 to prevent another steel import surge that would undermine our industry and destroy good paying American jobs."

Tai and Raimondo said the "deal will help ensure the long-term viability of our steel industry and protect American jobs. It is also part of our efforts to provide relief for American manufacturers who rely on readily accessible, affordable steel to make their products and lower prices for American families."

Tai said, “This agreement, combined with last year’s resolution with the European Union, will help us work together with Japan to combat China’s anti-competitive, non-market trade actions in the steel sector, while helping us reach President Biden’s ambitious global climate agenda."

Raimondo emphasized that the deal will both ensure that U.S. steel jobs are competitive "while also providing more access to cheaper steel and addressing a major irritant between the United States and Japan, one of our most important allies."

Section 232 tariffs on Japanese aluminum aren't affected by the settlement.

The U.S. will provide information about how much of the quota is used, on a public website, including information about unused TRQ volumes that were transferred. There is space for the quota to increase or decrease with demand, though it will only increase half as much as demand does. The U.S. agreed to consult with Japan if there is "substantial" under-use of the quota.