US swaps out Section 232 tariff on UK steel, aluminum with quota

The US will replace the Section 232 steel and aluminum tariffs on shipments from the UK with a quota system that will allow some volumes of imports to enter the country duty-free beginning in June, according to a joint statement March 22.

The quota will exempt duties on annual US imports from the UK for up to 500,000 mt of steel, 900 mt of unwrought aluminum, 11,400 mt of semi-finished aluminum and 9,300 mt of aluminum foil, the US and UK said.

The two nations also agreed to cooperatively address non-market overcapacity, industry carbon intensity, trade remedies, trade monitoring and other "customs matters."

"The US and the UK agree to review the operation of this arrangement, and ongoing cooperation, on an annual basis, including in light of changes in the global steel and aluminum markets, US demand and imports," the governments said in the statement.

US imports of steel products from the UK must be melted and poured in the UK in order to be eligible for protection under the quota, according to the arrangement. The deal also includes a novel smelt and cast requirement for aluminum. Additionally, any metal produced in the UK by a company linked to China will come under review and require an "attestation."

"The attestation will be based on an annual strategic audit conducted by an independent third party, to the effect that there is no evidence of market distorting practices by that producer in the UK that would materially contribute to non-market excess capacity of steel," according to the statement.

The "melted and poured" provision is less stringent for UK-produced steel that is further processed in the EU.

"Steel imports which are melted and poured in the UK but further processed in the EU, conferring an EU country of origin, and subsequently imported into the US may be eligible for duty-free treatment under the quota and count against the UK quota volume, not to exceed 37,800 mt," the statement reads.

The US' 25% steel tariff and 10% aluminum tariff was imposed on most other countries in 2018. The US recently made separate deals with the EU and Japan to replace the tariffs with a quota scheme.

The US imported a total 281,606 mt of steel from the UK in 2018 and 231,104 mt in 2019, including carbon, alloy and stainless products, according to Commerce Department data. Imports from the UK fell to 190,240 mt in 2020 but rose to 272,079 mt in 2021.

Meanwhile, the US imported 127.5 mt of unwrought aluminum, 4,862 mt of flat semi-finished aluminum and 9,314 mt of aluminum foil from the UK in 2021.