Washington — A diverse group of industry officials Tuesday urged the US administration and Congress to remove Section 232 tariffs on steel and aluminum imports along with signing or ratifying the new United States-Mexico-Canada Agreement, but they said the trade deal was likely to be signed Friday with 232 tariffs remaining.
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Instead, it appears more likely it may include tariff-free import quotas for metals from Canada and Mexico, said Jennifer Thomas, vice president of federal government affairs, Alliance of Automobile Manufacturers. Thomas spoke at a media briefing organized by the Aluminum Association that also featured officials from Constellium, the US Chamber of Commerce, the Motor Equipment Manufacturers Association, Brewers Association and International Dairy Foods Association.
After a Section 232 investigation begun last year, the US in March imposed a blanket 25% tariff on steel imports and a 10% tariff on aluminum imports, extending those tariffs to Canada and Mexico June 1, when exemptions for the two countries expired.
The US now has quota agreements on steel imports from Argentina, Brazil and South Korea, and on aluminum imports from Argentina and Australia.
In announcing the USMCA pact October 1, US President Donald Trump said 232 tariffs would remain, but duty-free quotas for Canada and Mexico might be a possibility. Leaders of the three countries are expected to sign the agreement late this week at the G20 Summit in Argentina, prior to Mexico's outgoing President Enrique Pena Nieto leaving office December 1.
Speakers at Tuesday's briefing opposed quotas on steel and aluminum imports.
It is "vital to American workers and companies" that the US provide "quota-free tariff exemptions to Canada and Mexico as part of the USMCA," said Heidi Brock, president and CEO of the Aluminum Association.
Thomas agreed quotas on metal imports, or potential quotas on automobile imports, "are not a preferred outcome for industry" as they represent "managed trade." She called on President Trump to lift the tariffs as part of the signing, or suggested that Congress "needs to reassert itself in this debate," prior to the ratification of the trade agreement.
Buddy Stemple, CEO of Constellium Ravenswood, West Virginia, said he was urging the president "to remove the 232 tariffs as part of the USMCA agreement," with the signing a "perfect opportunity" to do so. He said he also was in contact with his congressman to ask that he "make sure these 232 tariffs are not in there" for Congress' ratification vote.
The panelists detailed consequences of the tariffs, with Thomas noting domestic steel prices had increased 30%, affecting car companies that source 90% of their steel from the US. She said the automotive industry was "very much bracing for a downturn," and the General Motors closures announced this week were evidence of that.
Thomas said the new automotive rules of origin in the USMCA pact contain an "unprecedented mandate for the use of US steel and aluminum and to have that mandate on top of existing tariffs is contradictory."
The auto industry is also concerned about the "looming threat of 232 auto tariffs," with a Commerce Department report on the 232 investigation into automotive imports "expected to be released any day," she said.
The aluminum tariff caused beer brewers to see delays and even cancellations of aluminum can supplies, said Brandon Skall, CEO and co-founder of DC Brau. With the tariffs, "we began seeing signs of aluminum shortages in our lead times pretty quickly," he said, noting they stretched out from two weeks to six weeks, and then to six months.
DC Brau then saw its can supplier unable to supply cans at all, forcing it to find a new can supplier. The company is now faced with ordering blank cans and putting labels on them until January, when it can resume receiving pre-printed cans. He said buying cans on the spot market had added 3.5 cents/can to his costs, plus the $25,000 cost of equipment to apply labels, which "more than doubled the cost of what we were paying before for cans.
"Hiccups like this can and will cost many brewers their businesses," Skall said. He told Platts he knew of at least a dozen breweries that had seen their can supplies disrupted.
Tier 2 and Tier 3 motor equipment suppliers, which supply 70% of automotive parts, had paid hundreds of millions of dollars in tariffs on imports of aluminum and steel from China, said Catherine Boland, the vice president, legislative affairs, of MEMA.
The dairy industry is now subject to a 25% Mexican tariff on imports of US cheese in retaliation, and has seen sales decline 10% for cheese in July through September alone, said Michael Dykes, CEO of the dairy association. He said he had been surprised to learn from Brock that the US aluminum industry "doesn't even want the tariffs."
Thomas cited several pieces of legislation introduced to roll back the 232 tariffs, but said "we need to see that legislation move."
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