Steel, Aluminum Quotas Extended, EU Retaliatory Tariff Suspension to Continue
In this video from The Franklin Partnership, contributing author Omar Nashashibi offers important tariff updates.
On December 28, 2023, President Biden signed two proclamations, one on steel, the other on aluminum, extending the Tariff Rate Quota system on imported steel and aluminum from the European Union through 2025. This effectively keeps the tariffs on roughly $7 billion in imported EU steel and aluminum off through at least the first full term of Biden’s presidency. Such action could be reversed with another presidential proclamation.
In preparation, the EU on December 19, 2023 announced that it will continue to suspend the tariffs on roughly $1.6 billion in U.S. exports that it implemented in response to the Section 232 tariffs. However, while the U.S. extended its TRQ system through 2025, the EU suspension of their tariffs only lasts through March 31, 2025, about two months after next year’s presidential inauguration.
By continuing the suspension on retaliatory tariffs into 2025, this means that U.S. exports of products as varied as American whiskey, corn, and rice, to metal products, clothing, and electronics will not face tariffs. The suspension of the 232s on the EU for two more years means that we will not see 25% tariff on imported steel and 10% on imported aluminum from the 27-member states of the EU unless they exceed the threshold for at least another year if not through 2025.
As part of the Section 232 action taken by former President Trump in 2018, the U.S. imposed tariffs of 25% on steel and 10% on aluminum on imports from nearly every country, including national security allies. In 2021, President Biden negotiated agreements with Japan, the UK, and European Union to replace the 25% and 10% tariffs on steel and aluminum with a Tariff Rate Quota system, or TRQ.
The TRQs remain in place and allow importers of a specific steel or aluminum product from the UK, Japan, or one of the 27-EU member states to enter the U.S. tariff free, until the import levels reach the quota limit. The individual quota limits are set by the EU for the countries. Once the quota limit is reached, quarterly for steel and semiannually for aluminum, then the tariffs of 25% and 10% take effect for the duration of the quota period.
The U.S. Customs and Border Protection each week posts the Commodity Status Report for Quotas. If you are importing steel or aluminum from the EU, it may be useful to track the level of imports of that product from the source country as you do not want to be caught by surprise if your imported material is suddenly subject to a tariff due to the quota limitations.
For supply chain planning, consider factoring in that we could face additional uncertainty with the tariffs in a year depending on election outcomes. The EU agreeing to continue the tariff suspension on over $1.6 billion in U.S. exports is only temporary and tariffs will remain part of the equation one way or another for the next few years.
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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.
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