As much as President Joe Biden is focused on placing tariffs on Chinese steel and aluminum, his administration might grant tariff waivers to Chinese-made metal fabricating equipment. frontpoint/iStock/Getty Images Plus
President Joe Biden’s administration is moving forward with its increase in tariffs on imported Chinese steel and aluminum. After President Biden’s commitment to do that in April in front of the unionized steelworkers, the U.S. Trade Representative (USTR) confirmed the tariff increases in a proposed rule it published on May 18 asking for comments. But what was something of a surprise was the USTR’s apparent consideration of waiving Chinese tariffs on manufacturing equipment, some of it important to metal fabricators. Perforated Wire Mesh Machine
The USTR proposed rule lays out Section 301 tariff increases on many Chinese imports. Tariffs on steel and aluminum are very likely to increase from the current 7.5% to 25%. That is in addition to the Trump Section 232 national security tariffs on most worldwide steel and aluminum imports of 25% and 10%, respectively. Despite the USTR request for public comments by the end of June, the increases are, for all intents and purposes, a done deal.
Higher Chinese steel and aluminum tariffs are a certainty, but those tariffs might or might not be extended to manufacturing equipment. This is something metal fabricators in the U.S., serving many important industrial sectors, like automotive, structural steel, or any other sector, should be watching. The long list of manufacturing equipment up for exclusion includes a number of tariff classifications that are ostensibly important to U.S. steel fabricators.
For example, among the possible exclusions in Annex B are those for machines operated by laser (8456.11.90); waterjet cutting machines (8456.50.00); machines for arc welding of metals (8515.31.00); machines and apparatus for hot spraying metals (8515.80.00); and machines for resistance welding of metal (8515.21.00). While the USTR has included a separate Annex C featuring equipment used for making solar panels, which appears to be Biden’s main concern in terms of protecting a nascent domestic manufacturing sector, Annex B equipment appears to be the Biden administration’s signal that it wants to continue reshoring efforts, but it doesn’t want to damage the broader U.S. manufacturing base. (To view Annex B, visit this Federal Register notice.)
As these public announcements are being made, China is still experiencing some success having Chinese steel come in duty free from Mexico as a result of the U.S. Mexico Canada Agreement (USMCA). On Feb. 16, USTR Ambassador Katherine Tai met with Mexican Economy Secretary Raquel Buenrostro to discuss the matter. Tai urged Mexico to “take immediate and meaningful steps to address the ongoing surge of Mexican steel and aluminum exports to the United States and the lack of transparency regarding Mexico's steel and aluminum imports from third countries.”
The Biden administration’s high-profile consideration of higher Chinese tariffs on steel and aluminum certainly overshadowed another steel and aluminum tariff development. That was the U.S. Department of Commerce’s decision in May to eliminate tariff exclusions for steel and aluminum otherwise subject to the worldwide Section 232 national security tariffs imposed by President Donald Trump in 2018. Those 232 tariffs are different than the Section 301 tariffs only on Chinese goods.
Over the last six years, the Commerce Department has published a number of steel and aluminum product categories that automatically avoid Section 232 tariffs. These General Approved Exclusions (GAEs) are for steel and aluminum products consistently found not to be produced in the U.S. Importers of those products do not have to submit paperwork proving the product is not available here. The Commerce Department’s Bureau of Industry and Security (BIS) has winnowed the number of GAE products over the past five years. The latest came in mid-May when the BIS removed 12 of the 93 GAEs, six each from steel and aluminum. Importers now have to pay the 25% and 10% tariffs, respectively, on these:
Besides the GAEs, the BIS maintains a list of General Denied Exclusions, which was put in place a few years ago. The agency had considered making some changes but delayed that decision, saying there will be “a forthcoming final rule that details broader changes to the Section 232 exclusions process.”
The Fabricator is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The Fabricator has served the industry since 1970.
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