Section 232 – What You Need to Know

April 30, 2018 | Pete Shelton, Director of Purchasing | Kingspan Insulated Panels

What is “Section 232”?
  • Section 232 of the US Trade Expansion Act of 1962, gives the President the ability to conduct investigations to “determine the effects on national security of imports.”
    • The US Commerce Department issues a report to the President with its findings to determine whether certain imports threaten to impair national security.
    • The President has 90 days to concur with the findings, and use statutory authority to “adjust the imports” as necessary via tariffs or quotas.
Why is the tariff being imposed?
  • The President is following the Commerce Department’s recommendation that action must be taken to “protect the long-term viability of our nation’s steel and aluminum industries.”
  • On March 8, 2018, the President issued a 25% tariff on steel, and a 10% tariff on aluminum effective March 23, 2018 on all US imports of those products from all countries except Canada and Mexico.

Are there exclusions to the tariff?
  • At the March 8, 2018 announcement, the President proclaimed nations could negotiate with the U.S. Trade Representative for exemptions.
  • On March 22, 2018 it was announced Argentina, Australia, Brazil, European Union, and South Korea would be exempted from the tariffs thru April 30, 2018 while trade negotiations continue. 
    • South Korea has agreed to set quota limits of 70% of prior three years’ shipments to permanently maintain tariff exclusion.
  • Some non-exempted countries are seeking relief from the World Trade Organization and / or U.S. Courts to invalidate the tariffs.

What is the effect of the tariff?
  • With the anticipated increased cost of imported steel, the price of North American steel has been rising.
    • Buyers of steel are shifting purchases away from imports and the increased demand is creating shortages and extended lead times in the North American market.
    • The price of Hot Dipped Galvanized Steel (HDG) has risen 30% in the last 4 months.
  • Domestic steel producers are adding production capacity to meet the increased demand and investing in improving production as the higher prices increase profits.
  • Domestic steel consumers (automotive, appliance, construction, food and beverage) are increasing prices to reflect the higher input costs.