Four Trade Updates: Greenhouse Gas Steel and Aluminum Investigation, Hydrogen Subsidies, Critical Minerals, and China Tariffs
In this video by Omar Nashashibi, with The Franklin Partnership, you’ll get updates on four key areas of focus impacting the global trade landscape.
Aluminum and Steel Investigation
The US International Trade Commission (ITC) has formally launched an investigation regarding steel and aluminum produced in the United States.
As part of the investigation, the ITC will conduct a survey by issuing questionnaires to companies with facilities producing steel and aluminum to gather information on three different scopes of Green House Gasses emissions intensity.
Scope 1 will cover direct emissions from sources owned or controlled by the producers, such as emissions from fuel combustion and electricity generation.
Scope 2 includes indirect emissions from purchased energy sources such as electricity, steam, heat, or cooling.
Scope 3 encompasses other indirect emissions with the value chain of the reporting company not covered by Scope 2.
The Schedule
ITC intends to post a draft of the questionnaire for comment as well as for the final questionnaire before it is issued to the steel and aluminum producers likely in the coming weeks. As part of the investigation, ITC will hold a public hearing on the probe on December 7th. Public comments will also be accepted through June 28th of 2024. ITC will submit a report to the Office of the US Trade Representative by January 28th, 2025 – as requested last month by US Trade Representative Katherine Tai.
Why an Investigation?
In June of 2023, Ambassador Tai requested the investigation to help inform the implementation of the forthcoming US / EU Global Arrangement on sustainable steel and aluminum, Top US and EU officials have said they hope to complete negotiations by October – a timeline that Ambassador Tai has pledged to keep. Obviously, the timeframe of a 2024 and 2025 for this ITC investigation does not align with the current October 2023 deadline for an agreement with the EU but it could factor into how the US responds to the EU’s carbon border adjustment mechanism that in 2026 will start to phase in.
There’s a lot going on in the carbon trading space and greenhouse gas emissions and opposing tariffs on carbon intensive exports; so this is an area we are watching very closely in the coming months, heading into October in particular.
EU Response to IRA Subsidies on Hydrogen
Sticking with Europe and where environmental and trade policy continues to intersect, a leading lawmaker on trade issues in the European Parliament called for new tariffs on US hydrogen exports and criticized Inflation Reduction Act subsidies as illegal. The head of the European Parliament Committee on International Trade said “if you produce hydrogen in Texas now, then first you get the infrastructure subsidized. If you install additional wind energy — another subsidy — and production is subsidized for 10 years. That’s something they do not do in Europe at this point, thought some are calling for that to expand.
The US exported $1.7 billion worth of hydrogen in 2021; and that was before the inflation reduction act support took effect, so that’s another to continue to watch.
Critical Minerals Agreement
The EU and US are continuing to talk about cooperation on a critical minerals agreement which would pave the way for electric vehicles made with EU minerals to qualify for US credits under the Inflation Reduction Act.
The US launched its own green deal industrial plan in response to the IRA and we are seeing an increased effort by Europe to better position itself for the future energy and semiconductor-based industries. So expect concerns by the EU to continue along with a response to the US efforts on the Inflation Reduction Act and CHIP semiconductor law that the EU continues to view as illegal subsidies under WTO rules.
Tariffs on 10,000 China Goods are Still in Place…for Now
We crossed the 1-year mark since the US Trade Representative (USTR) launched its mandatory 4-year review of the Section 301 tariffs imposed on China by former President Trump and kept in place by President Biden. The Trump Administration imposed 25% tariffs on three different lists, lists 1 through 3, having roughly 6800 total products facing a 25% tariff while list 4A has around 3200 goods and 7.5% tariffs on those imports.
The tariffs remain in place, and right now we are not hearing they are going to unilaterally lift those tariffs during this current review. That is their right within the law…but the law said that after 4 years they did have to conduct a review to look into the effectiveness. Sum total there are 10,000 products made in China that are tariffed coming to the US, and a lot of companies producing and competing in the US with those products are vying to keep those tariffs in place while others are trying to lift them.
Regarding the timing of that report, we did have Secretary of Treasure Janet Yellen travel to China in July and in that month say they had not completed that report yet – that the Biden Administration was still conducting the review. There had been some discussion in Washington that upon completion the US Trade Representative’s Office would hold some type of a public hearing to review those findings.
There are a lot of stakeholders who are anxious to see what might happen next regarding China Tariffs. Most still expect USTR to at some point re-start an exclusion process allowing importers to request a temporary suspension on a specific import. We will see what the rest of August will bring as we do have the last of the active exclusions expiring at the end of September and could see some possible action by USTR by then.
How CLA can help
We’ll keep you posted on all of these developments – so check back often for updates.
CLA has contracted with Franklin Partnership and Omar Nashashibi to provide the content for article.
Jennifer Clement is an executive sales and marketing leader specializing in value creation for the C-suite. In her current role at CLA, Jennifer collaborates on strategy with executives of global manufacturing and distribution companies to accelerate results. Previously Jennifer served as a Global Business Acceleration Leader for Complete Manufacturing and Distribution (CMD). During her time with CMD, Jennifer lived and worked in Asia from 2015-2019. Prior to CMD, she spent 10 years in senior care technology. Jennifer started her career at Johnson Controls (JCI) and spent nine years in leadership roles; followed by five years at Rockwell Automation (ROK) leading c-suite strategy and marketing operations.
Comments are closed.