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Russia slams tariffs on US goods in response to steel, aluminum duties

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Russia slams tariffs on US goods in response to steel, aluminum duties

Russia imposed tariffs of between 25% and 40% on U.S. goods in response to Washington's restrictions on imports of steel and aluminum, the Russian Economic Development Ministry said July 6.

"Compensatory measures are being imposed in the form of additional, heightened import duty rates of from 25% to 40% on the value of the imported good," Minister of Economic Development Maxim Oreshkin said. He added that the tariffs apply to certain goods that are also produced in Russia.

"The additional duties will support Russian enterprises that produce analogous products," he said. "They will be able to replace the American supplies on the domestic market."

The measures will apply to certain types of road construction equipment, oil and gas equipment, metalworking tools, rock-drilling tools and fiber optics.

Oreshkin went on to say that the damage of the U.S. tariffs on Russian exporters of steel and aluminum is estimated at US$537.6 million. According to the minister, Russia's counter measures will only compensate for a portion of those losses — US$87.6 million.

"Russia may enact the remaining part of compensatory measures either after three years from the date that the U.S. tariffs entered force (March 21, 2021) or after the World Trade Organization's dispute settlement panel rules that the U.S. measures are noncompliant with WTO rules," he said.

Russia on July 2 became the seventh country to lodge an official complaint with the WTO against the U.S. duties on steel and aluminum imports. Russia argues that the U.S.'s 25% duty on steel imports and 10% duty on aluminum imports violate WTO rules.

China, India, the EU, Canada, Mexico and Norway have lodged similar complaints.

The American government implemented the tariffs March 23, prompting a wave of condemnation from its trading partners warning of subsequent trade war.

Although Russia is not a major supplier of steel and aluminum to the U.S., steel producers such as PAO Severstal, Evraz PLC and PJSC Novolipetsk Steel have been affected.

Novolipetsk Steel told S&P Global Market Intelligence that it continues to supply steel slabs to the U.S. to support their client base.

"In the U.S. there are no other sources of steel slabs to match the required volumes," Novolipetsk head of public relations Sergey Babichenko said July 4. He added that the company is currently waiting for the Department of Commerce to reach a decision regarding the exclusion application it filed after the tariffs came into effect.

Meanwhile, Severstal's press department said that the company's exports to the U.S. in 2017 represented around 2% of total steel product sales in revenue terms and 4% of steel product volumes.

"We will have no trouble redirecting these volumes to other markets," the company said in a statement.

Evraz will continue to export slab to the U.S. regardless of the 25% tariffs imposed by the American government, company CFO Nikolay Ivanov said in a June 4 interview with Interfax.

"On the one hand, it has become more expensive to export our steel product to the U.S., but on the other, as we expected, domestic prices have risen on the U.S. market due to the tariffs," he said.

Ivanov went on to say the effects of the tariffs on Evraz have been minimal so far, but the removal of Canada from the exemptions list could cause some problems for the Russian steelmaker. Evraz has also requested an exemption from the tariffs.