Effective June 1, the existing 25% tariffs on steel will be replaced with a tariff-rate quota (TRQ) set at 500,000 tonnes on 54 product categories, according to the announcement.
The steel quotas will be administered on a quarterly basis, with the 25% tariff applied to volumes that exceed the assigned limit, provided that they are not subject to an exclusion.
The existing 10% tariffs on aluminium products will be replaced with TRQs set at 9,000 tonnes for unwrought aluminum under two product categories and at 11,400 tonnes for semi-finished (wrought) aluminum, other than foil, under 12 product categories. For foil, the annual import volume under the TRQ is set at 9,300 tonnes under two product categories.
The aluminium quotas will be administered on a semi-annual basis, with the 10% tariff applied to volumes that exceed the assigned limit, provided that they are not subject to an exclusion.
Notably, any UK steel company that is owned by a Chinese entity must undertake a financial audit to assess influence from the Chinese government. The results of such audits must be shared with the US.
The deal allows for “historically based sustainable volumes of UK steel and aluminium products to enter the US market without the application of Section 232 tariffs,” according to the Commerce release.
And as part of the deal, tariffs applied to US exports that the UK imposed in retaliation to Section 232 will also be lifted.
“Today’s historic deal... will benefit America’s steel and aluminium industries and workers by protecting manufacturing as well as consumers by easing inflationary pressures in the US,” US Secretary of Commerce Gina M Raimondo said in a statement. “By allowing for a flow of duty-free steel and aluminium from the UK, we further ease the gap between supply and demand for these products in the United States.”
The Washington-based Steel Manufacturers Association (SMA) commended the agreement.
“This group has reached three major agreements with the EU, Japan and UK in under six months. Their hard work and determination are appreciated,” SMA president Philip K Bell said.
“The Steel Manufacturers Association is pleased... This agreement will help with the problems of global excess steel capacity, transshipment, illegal dumping and subsidies,” Bell added. “We are glad to see that the arrangement also includes a requirement to audit Chinese-owned steel producers in the UK. This will help prevent favorable Chinese financing and subsidies and thwart China’s attempts to evade fair trade laws by using foreign investment.”
The United States first imposed Section 232 tariffs of 25% on steel imports and 10% on aluminium imports from most countries in March 2018; the duties were applied to shipments from Canada, Mexico and the European Union in June 2018.
Fastmarkets’ steel hot-rolled coil index soared in the months after the 232 duties were first implemented. Now, another rally in hot band prices is underway in the United States, with many market participants citing the impact the Russia/Ukraine war is having on raw material supplies and energy costs.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $68.94 per hundredweight ($1,378.80 per short ton) on Tuesday March 22, its highest level in nearly two months.