UK & US agree way forward on steel tariffs
Following several rounds of talks, the United States has agreed to ease tariffs on steel and aluminium imports from the United Kingdom.
The aggregate annual import volume of steel products, from the United Kingdom, allowed under the new agreement is set at 500,000 tonnes. This will be recorded under 54 product categories with import volumes held in line with tonnages entering the United States during the 2018/2019 period. Allocations for each product category will be made on a first-come, first-served basis.
To be eligible, steel imports must be “melted and poured” in the United Kingdom and have UK country of origin certification. Additionally, an annual quota of 37,800 tonnes of material, which is melted and poured in the UK, but further processed in the European Union, conferring an EU country of origin status, will be allowed and will count against the UK balance.
Steel from the United Kingdom will be subject to a 25% tariff once the quota limit is reached. The United States also plans to maintain its exclusions process, as implemented under the initial Section 232 scheme. This new agreement will take effect from 1 June 2022.
Quota volumes will be administered on a quarterly basis and will be reviewed annually. This includes an adjustment mechanism if steel demand in the United States increases, or decreases, by more than 6%, year-on-year. In this event, import allowances would be altered by plus or minus 3%. If demand in the United States is not determined to have changed by more than 6% then the quota allowances will remain unaltered.
The United States has reserved the right to deny UK steel companies, with Chinese owners, access to the quota system unless they can prove that they are not in receipt of state subsidies. There is a six-month grace period before this rule takes effect.
In return, the United Kingdom will suspend the reciprocal tariffs it imposed on goods from the United States, in response to the initial Section 232 action. These include whiskey, blue jeans, and motorcycles. The United Kingdom plans to maintain its steel safeguard system, which it adopted in February 2021, following its withdrawal from the European Union.
Both sides have also agreed a five point plan to address the wider issue of excess global steelmaking capacity and market-distorting practices. This also includes a pledge by authorities in the United Kingdom to conduct formal reviews when any domestic steel producers are acquired by foreign companies.
The agreement follows two earlier deals forged by the United States, with the European Union and Japan, relaxing the import restrictions first imposed in 2018.