Thursday, 15 March 2018

Trump tariffs

There is a useful background briefing from the EU members research service. Some facts and a historical perspective stand out for me:

Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. §1862), authorises the US Secretary of Commerce to conduct investigations that seek to determine the effects of particular imports on US national security. If such an investigation finds that those imports threaten to impair national security, the US President can take action to adjust imports. Since 1963, 26 investigations have been initiated, of which eight found potential security threats and five resulted in presidential action. The most recent investigation dates from 2001 and concerned imports of iron ore and semi-finished steel. It did not find a threat to US national security. According to the Section 232 investigations, the US imported around 30 % of its steel in 2017, and 64 % of its aluminium in 2016 (this figure rises to 89 % for primary aluminium, i.e. not recycled). The Peterson Institute for International Economics (PIIE) has calculated the size and origin of US imports of steel and aluminium for 2017 (in terms of value). In the case of steel, total US imports amounted to US$29 billion, and the top 5 foreign sources were the EU (US$6.2 billion), Canada (US$5.1 billion), South Korea (US$2.8 billion), Mexico (US$2.5 billion) and Brazil (US$2.4 billion). For aluminium, total US imports amounted to US$17 billion, and the top 5 sources foreign sources were Canada (US$6.9 billion), China (US$1.8 billion), Russia (US$1.6 billion), the United Arab Emirates (UAE) (US$1.3 billion) and the EU (US$1.1 billion).
The Trump administration bases its decision to impose tariffs on steel and aluminium imports on national security concerns. Under WTO law, countries can indeed invoke national security to justify trade restrictions: the General Agreement on Tariffs and Trade (GATT) contains security exceptions in Article XXI that permit WTO members to deviate from the agreement’s rules in specific cases. So far, countries have rarely invoked these exceptions and the WTO has never had to make a ruling on it (though recently there have been a few instances in which Article XXI GATT was brought up, including a dispute between Qatar and the UAE).

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