Supply Chain Relief by Way of Partial Lift of Steel and Aluminum Tariffs

The Fabricator - for the original article go HERE:

White House looks to ease supply chain troubles, crack down on Chinese imports from Europe

A key U.S. steel users group voiced mixed feelings about the new U.S.-European Union agreement partially lifting 25% import tariffs on steel and 10% import tariffs on imported aluminum from European countries. The agreement has a dual purpose: easing supply chain problems for a broad cross section of U.S. manufacturers who use steel and tamping down cheap Chinese steel slithering into the U.S. through Europe.

Additionally, follow-on tariff rate quota agreements appear to be in the works with the United Kingdom and Japan, based on two, parallel U.S Department of Commerce statements on Oct. 31. The statements said: “The United States and the [United Kingdom or Japan, depending on the statement] are consulting closely on bilateral and multilateral issues related to steel and aluminum, with a focus on the impacts of overcapacity on the global steel and aluminum markets; the need for like-minded countries to take collective action to address the root causes of the problem; and the climate impacts of the sectors.”

The Biden administration will eliminate tariffs on 3.3 million metric tons of imported European steel, which is the average of those imports between 2015 and 2017. Imports above that level will continue to be subject to duties of 25%. To be eligible for duty-free treatment under the quota, 54 product categories of steel imports must be “melted and poured” in the EU. Manufacturers that won exclusions to import duties in the past will have those exclusions extended to Dec. 31, 2023. Those totals will not be counted against the 3.3-million-ton ceiling.

Aluminum imports allowed in tariff-free amount to 18,000 metric tons for unwrought aluminum under two product categories and 366,000 metric tons for semifinished (wrought) aluminum under 14 product categories. Derivative articles of aluminum are exempt. The U.S. will maintain its aluminum product exclusion process.

The Coalition of American Metal Manufacturers and Users (CAMMU) called the agreement good news, but said, “It is disappointing that the agreement will not completely terminate these unnecessary trade restrictions on our allies. CAMMU is concerned that replacing the tariffs with a tariff rate quota will hurt its members because the threat of tariff reinstatement looms with the surge in steel and aluminum demand expected when the bipartisan infrastructure bill passes.”

The somewhat conflicted view of users parallels the hitches in the view of steel manufacturers expressed by the American Iron and Steel Institute (AISI). Kevin Dempsey, AISI president/CEO, appreciated the Biden administration’s “commitment to addressing the global steel overcapacity crisis and to combatting unfair trade practices in the global steel sector.” But he went on to stress the importance of proper enforcement of the agreement particularly with regard to preventing seepage of cheap Chinese steel into the U.S. through Europe and the need for “new trade approaches to address climate change, including through development of effective carbon border adjustment measures.”

U.S. steel production, which relies heavily on electric-arc furnaces, is regarded as having far lower carbon emissions than the coal-fueled blast furnaces prevalent in China.

Widespread Industry Support for Updated Mechanical Power Press Safety Standard

Industry is showing widespread support for the Occupational Safety and Health Administration (OSHA) to update its current mechanical power press standard with ANSI B11.1-2009 (R2020).

The agency issued a request for information on July 28. The OSHA standard includes requirements for inspecting, maintaining, and modifying mechanical power presses to ensure that they are operating safely as well as a special reporting requirement for injuries to employees operating mechanical power presses. The standard also includes requirements for safeguarding the point of operation.

The Precision Metalforming Association (PMA) told the OSHA the latest ANSI B11.1 standard, which is comprehensive and proven effective, also includes requirements for increasingly popular servo presses and requirements for the composite press production system, including automation.

That said, the Industrial Fasteners Institute wants the OSHA to grandfather older mechanical presses that comply with the 1971 standard. “Older machines may be perfectly safe and functioning properly, but since their wiring was done before the current ANSI standard was issued, then it would be unreasonable to expect a costly, unnecessary upgrade,” the organization said in a statement.

Author bio:
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.

Getting an Exclusion From Steel, Aluminum Tariffs Just Got Harder

The Fabricator - for the original article go HERE. 

President Joe Biden is unlikely to quickly eliminate steel and aluminum tariffs imposed by former President Donald Trump, particularly because the U.S. Department of Commerce has theoretically given the Biden administration new breathing room in the form of its latest changes to the exclusion process. Many manufacturers argue that they should not be subject to the tariffs because the steel or aluminum they need is not available from U.S. manufacturers, and they use this exclusion process as they seek relief.

U.S. metal manufacturers have complained loudly about that exclusion process since Trump imposed the 25% tariff on steel and the 10% tariff on aluminum in 2018. They cite the time it takes for the Commerce Department to either approve or disapprove an exclusion application and the favor that the agency has appeared to show U.S. steel manufacturers in objecting to those exclusion requests.

But metal manufacturing companies will view the mid-December interim final rule as mostly thin gruel. On the positive side, the Commerce Department established general approved exclusions (GAEs), categories of specific steel and aluminum products that had been reviewed as part of exclusion requests and did not receive any objections. As a result, products found within these GAEs are exempt from the import tariffs, and the product manufacturers do not need to apply for exclusion requests. This change is expected to result in an estimated immediate decrease of 5,000 exclusion requests annually. The Commerce Department reported the possibility of adding more GAEs in the future. Unlike individual exclusion requests, GAEs do not include quantity limits.

Two separate supplements exist for GAEs—one for steel and another for aluminum. The rule added 108 GAEs for steel articles and 15 GAEs for aluminum articles. The two new supplements specified that, to use a GAE, the importer must reference the GAE identifier in the Automated Commercial Environment system that corresponds to the steel or aluminum articles being imported. Agency officials said that the manufacturing community should expect no retroactive relief for GAEs.

The Commerce Department, in consultation with the other agencies referenced in the new supplements, will determine what steel or aluminum articles warrant being included in a GAE. The public will not be involved in requesting new or revised GAEs, but the Commerce Department will use the information provided in exclusion requests to inform its review process for what additional GAEs should be added or what revisions should be made to existing GAEs.

While the new GAEs are a positive development for steel product manufacturers, steel and aluminum producers have their own reasons to be excited about a couple of changes that accompany the new GAEs. In fact, these new developments far outweigh anything being done for the steel users.

The Commerce Department added a new certification requirement for exclusion volumes requested. In the past, applicants for exclusion only had to estimate the total quantity of metal that they needed. Because some administration officials had concerns that some applicants might have exaggerated their raw material requirements, manufacturers seeking relief from the tariffs now have to attest that they have a purchase order for the imported products or that they intend to process the imported metal within the next 12 months. The applicants also must attest that the imported metal is not being used solely as a hedge against current market prices. Without documentation to justify these assertions, a manufacturer will have its exclusion request deemed incomplete and rejected.

In addition, steel and aluminum producers are getting a bit of breathing room when supplying steel to manufacturers that otherwise would be relying on imported sources. In the past, if a company such as U.S. Steel, for example, argued against a particular exclusion request, it had to be able to supply the domestically produced steel “immediately,” which the Commerce Department defined as within six to eight weeks. But a foreign steel producer that objected had no time limit. Now the term “immediately” is retained, but language has been modified to apply the same time standard to U.S. objectors, giving them more “wiggle room.”

Paul Nathanson, executive director, Coalition of American Metal Manufacturers and Users, said the new certification requirement “will make it even more difficult for manufacturers seeking an exclusion for a steel product.” He pointed out that there is no parallel requirement for suppliers to certify they can make the product.

“The rule also sets users up for more denials of exclusions requests by removing the eight-week reasonable delivery time period domestic producers had to meet prior to this change,” he adds.

The Biden Commerce Department will probably issue future regulatory fixes to the exclusion process, but Nathanson argued, “No changes to the exclusion process can adequately address the steel shortages and price spikes that are hurting steel- and aluminum-using manufacturers who are already confronting severe economic challenges caused by the COVID pandemic. Instead of ‘fixing’ the exclusion process, the Biden Administration should terminate the Section 232 steel and aluminum tariffs as quickly possible because of the damage they are inflicting on U.S. manufacturers.”

Author bio:
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.

Trump Loosens Steel and Aluminum Import Restrictions

The Fabricator - September 2018 for the original article go HERE.

Quotas set for Argentina, Brazil, and South Korea

By: Stephen Barlas

Argentina, Brazil, and South Korea are no longer subject to the tariffs, according to a presidential proclamation. This could make sourcing steel and aluminum trickier down the road as other countries look to negotiate their own deals to get out from under the tariffs.

President Trump made a slight concession on steel and aluminum tariffs via a presidential proclamation on Aug. 29, but it is unclear whether the White House will conduct a broader review of the exclusion process, which has been heavily criticized.

The proclamation only covered steel imports from Argentina, Brazil, and South Korea and aluminum imports from Argentina. Steel and aluminum import quotas were placed on those countries in lieu of the 25 percent steel and 10 percent aluminum tariffs. No exclusions were allowed for those “quota”
countries.

Now, according to the Trump proclamation, at the end of August exclusions from quotas will be allowed if importing fabricators can make the case that insufficient quantity or quality is available from U.S. steel or aluminum producers. In such cases, an exclusion from the quota may be granted and no tariff would be owed.

A second provision in the proclamation affects steel articles destined for use in a facility construction project in the U.S. that were contracted for purchase before the decision to impose quotas and cannot presently enter the country because a quota has already been reached. In that instance, an exclusion from the quota may be granted, but the product may only be imported upon payment of the 25 percent tariff.

One aluminum industry official who did not want to be identified explained, “This new process won’t affect aluminum much right now, but it would if other countries opt to take a quota instead of the tariff. Absolute quotas are tricky to implement and can be disruptive for consumers, since it’s hard to know when exactly the quota will be reached and therefore hard to plan for purchasing and shipping. An exclusion process on the quotas could be a sort of ‘last resort’ option for the companies that might have purchased their steel before the quota was reached but haven’t yet had it delivered.”

NAFTA Reboot Would Help Manufacturers

The U.S.-Mexico revisions to the North American Free Trade Agreement (NAFTA) contain some major benefits for domestic manufacturers, particularly those in the auto industry. But metal fabricators may be unhappy that the agreement does not do away with U.S. tariffs on imported Mexican aluminum and steel.

Whether the U.S.-Mexico agreement even goes into effect probably hinges on whether Canada signs on to the U.S.-Mexico revisions, which may be necessary before Congress would approve the new NAFTA. It also is unlikely U.S. manufacturers would support a Mexico-only agreement.

“Because of the massive amount of movement of goods between the three countries and the integration of operations which make manufacturing in our country more competitive, it is imperative that a trilateral agreement be inked,” said National Association of Manufacturers (NAM) President and CEO Jay Timmons.

The agreement encourages U.S. manufacturing and regional economic growth by requiring that 75 percent of auto content be made in the U.S. and Mexico. Auto industry manufacturers that don’t meet these requirements will pay a 2.5 percent tariff on vehicles crossing the border. The original NAFTA sets the floor at 62.5 percent. Another provision requires that 40 to 45 percent of auto content be made by workers earning at least $16 per hour.

One thing the new agreement does not do is eliminate the 25 percent tariff on steel and the 10 percent tariff on aluminum imported into the U.S. from all countries, including Mexico and Canada. Mexico’s Secretary of Economy Ildefonso Guajardo Villareal said after the agreement was signed that he hoped the tariffs on Mexican exports to the U.S. of steel and aluminum would be eliminated in any agreement approved by Congress.

Author bio:
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.

Trump Administration Considers New Tariffs on Chinese Aluminum

The Fabricator-December 2017 for the original article go HERE. 

During his campaign for president, Donald Trump was not quiet about his desire to improve the U.S. trade deficit with its trading partners. In particular, he railed against China on a regular basis. He remains focused on this task, and in late November he asked the U.S. Department of Commerce to begin an investigation into the possible dumping of certain aluminum stock into the U.S. market. If trade penalties result from this investigation, domestic manufacturers may be forced to pay more for aluminum in late 2018 or early 2019.

The Trump administration’s decision to initiate an investigation on whether China is either dumping or subsidizing imports of certain kinds of aluminum in the U.S. will lead to both statistical analysis and political calculation.

To begin, the U.S. Department of Commerce (DOC) will have to see whether unclad and multialloy clad aluminum sheet is being sold here below the price of manufacture (also known as dumping) or if the Chinese government is subsidizing those same aluminum producers. The DOC estimated a dumping margin of between 56.54 and 59.72 percent. Common uses for the products under investigation include gutters and downspouts, building facades, street signs and license plates, electrical boxes, kitchen appliances, and tractor-trailers hauled by semitrucks.

Once the DOC establishes the accuracy of its initial analysis, then the matter goes to the U.S. International Trade Commission (ITC), which decides whether domestic producers of common aluminum alloy sheet are materially injured or threatened with material injury. That decision would be expected to be made within 45 days of the ITC picking up the case. If domestic producers are believed to have suffered, the DOC makes the final determinations regarding dumping, subsidization, and injury. Such a decision likely wouldn’t occur until late 2018 or early 2019.

The Aluminum Association welcomed the investigation, which has some added impetus because the Trump administration initiated it instead of waiting for U.S. aluminum manufacturers to file complaints with U.S. trade officials, which is generally how these investigations get started. Trump railed about Chinese imports while campaigning for president, and the aluminum investigation is the latest evidence of his interest in this area. Trump also has loudly advocated for U.S. manufacturers broadly, and many of them rely on cheap Chinese aluminum.

Where this could get tricky politically is if groups like the National Association of Manufacturers or the Alliance for American Manufacturing oppose new tariffs on Chinese aluminum. Neither of those two groups responded to emails asking for their official positions.

When asked about his group’s position, Francis Dietz, vice president, public affairs, Air-conditioning, Heating, and Refrigeration Institute, responded with a letter his association sent to U.S. Trade Representative Robert E. Lighthizer earlier this year after Trump initiated a national security investigation on imported steel. That letter said in part: “…increasing the cost of steel and aluminum are of great consequence to the HVACR and water heating industry and its consumers.”

Liftoff for the LIFT

Manufacturing USA, the consortium of 14 manufacturing institutes including Lightweight Innovations for Tomorrow (LIFT), which is dedicated to lightweight metals manufacturing research, just released its 2016 annual report. The 2016 report contains an overview of the 14 manufacturing organizations, jointly funded by various federal agencies, with private-sector companies matching $2 for every dollar of federal funding.

LIFT, established in February 2014, concluded its second full year of operation with 10 new projects getting underway, some of them now near completion, according to Joe Steele, LIFT’s communications director. Some of those projects are:

• A melt processing project team successfully produced ductile cast iron differential cases with walls as thin as 2 mm at a Midwestern foundry. By reducing the wall thickness, the team achieved an overall 40 percent weight reduction on the component.
• Within the thermomechanical process (TMP) technology area, researchers successfully modeled the TMP history and resulting microstructure for linear friction-welded titanium for a compressor application.
• The joining and assembly project teams successfully produced a deckhouse prototype for a Coast Guard ship that featured fabricated parts with reduced distortion through the use of new weld and fixturing approaches. Also, new cost modeling tools have been developed and have demonstrated that the new approaches result in significant manufacturing cost savings in the shipyard.

Author bio: 

Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.