Trade and Industry on Section 232 Duties by United States

Section 232 Duties by the United States of America (US) on Steel and Aluminium Products

On 8 March 2018, President Trump announced the signing of a Proclamation to impose a 10 percent ad valorem tariff on imports of aluminium articles and a 25 percent ad valorem tariff on imports of steel articles from countries excluding Canada and Mexico, to be implemented on the 23 March 2018.

The Proclamation follows reports from the Secretary of Commerce that imports of these products threaten to impair United States of America (US) national security.

The Proclamation makes provision for country-based exclusions from the duties should the US and that country arrive at a satisfactory alternative means to address the threat to the national security.

In this regard, the South African government through the Minister of Trade and Industry, Dr Rob Davies has made a formal submission to the US requesting the exclusion of South Africa from the imposition of duties on steel and aluminium.

The Ambassador of South Africa (SA) to the US, Mr Mninwa Mahlangu has also engaged with the White House National Security Council Staff, State Department and the Office of the US Trade Representative (USTR) in this regard. In addition, Minister Rob Davies had a teleconference with Ambassador Mahoney, the Deputy United States Trade Representative for Investment, Services, Labor, Environment, Africa, China and the Western Hemisphere on 22 March 2018 which provided an opportunity for discussions on the matter.

South Africa has in its submission, emphasized that SA exports of aluminium products per annum are equivalent to about 1.6% of total US aluminium imports. These products consist of specialised aluminium sheet, coil and plate for processing in the US automotives, battery and aerospace industries.

The US Census Bureau data indicates that in 2017 the US imported a total of 33.4 million tons of steel, of which imports from SA were approximately 330 000 tons or less than 1% of total US imports and 0.3% of total US steel demand of 107 million tons.

As such, SA does not a pose a threat to US national security and to the US steel and aluminium industries but is a source of strategic primary and secondary products used in further value added manufacturing in the US contributing to jobs in both countries. Furthermore, SA assured the US that to a very large extent, the inputs for all steel and aluminium product exports to the US are sourced from local producers and that SA has a robust customs control system which prevents circumvention.

SA acknowledges the adverse effects of global steel overcapacity. The domestic steel sector has been severely impacted by low priced steel and steel product imports and as a result SA has implemented a number of trade remedy measures. In addition, SA supports and participates in the Organisation for Economic Co-operation and Development (OECD) and G20 multilateral process to achieve outcomes of a fair, sustainable and viable steel industry in the future.

SA’s endowment and exports of primary mineral and metal products (ferro alloys, vanadium, manganese, base and precious metals) have been a source of key input materials for the exceptional technological development in the US advanced manufacturing industries. SA’s exports account for a small percentage of total US aluminium and steel imports (1-2%) mainly consisting of semi-processed and in some cases niche steel and aluminium articles which are used in a number of sectors including oil and gas, automotives, aerospace, transport (bus and rail) playing a critical role in supporting the US economy.

SA notes with concern that it is not excluded from the application of the duties on steel and aluminium. The imposition of the duties will have a negative impact on productive capacity and jobs in a sector already suffering from global steel overcapacity.

In addition, SA notes with concern the different treatment of trading partners which will have an effect on the competitiveness of SA steel and aluminium products in the US. The Department of Trade and Industry continues to engage the industry on the matter and will pursue further discussions with the US on this issue.

Minister Davies will hold a media briefing on Monday, 26 March 2018 on the Section 232 duties imposed by the US and on the launch of the African Continent Free Trade Area at 15:00 at Tshedimosetso House (GCIS), in Pretoria with a link up to Imbizo Media Centre, Cape Town.

Source: Government of South Africa