Industry News

US and UK Reach Agreement on Steel and Aluminum Imports – Quota to Replace Section 232 Tariffs

Mar. 29, 2022

After two days of trade talks, on March 22, 2022, an agreement was reached between the US and the UK to roll back tariffs on British steel and aluminum that were initially levied by the Trump administration on the grounds of national security concerns.

The new deal takes a similar form to recent deals between the US and the EU, and the US and Japan. Starting June 1, 2022, an agreed-upon amount of steel and aluminum (or quota) from the United Kingdom may be imported duty free. If metal imports from the U.K. exceed the quota, they will be subject to the 25% duty on steel and/or the 10% duty on aluminum. Currently, the quota is set to 500,000 metric tons, which far exceeds the amount of steel imported from the UK in recent years. In return, the UK has agreed to lift retaliatory duties on roughly $500 million worth of American products. The retaliatory duties, originally imposed by the EU prior to Brexit, were maintained by the UK after its departure and principally targeted Harley Davidson motorcycles, Levi Strauss blue jeans, American whiskey and cigarettes.

The deal also requires that metals qualifying for duty-free treatment under the agreement be melted and poured in the UK though some minor processing in the EU is allowed. Additionally, the deal sets out smelt and cast requirements, requiring aluminum importers to certify the origin of raw aluminum used.

In reaching the agreement, the two countries espoused their committed to work together to counter China’s unfair trade practices. Under the terms of the agreement, any UK steel and aluminum company that is owned by a Chinese entity must conduct an audit of their financial records to identify the extent of influence from the People’s Republic of China government. The agreement requires that the results of these audits be shared with the US.

Secretary Raimondo has stated that the deal will help ease inflation in the United States, noting the historically high inflation rate, and also emphasized the relief this will bring for the steel and aluminum industry across the board. The UK’s International Trade Secretary Trevelyan similarly called the agreement “good news for the steel and aluminum sectors.” The agreement has also received support from those within the industry, like the U.S. Steelworkers Union, which lauded the deal as “an important step in addressing systemic problems like illegal dumping and global overcapacity that threaten the vitality and future of our steel and aluminum industries.” In contrast, there are some steelmakers expressing concerns that surges of steel into the US could likely hurt industry profitability. All the same, certain officials within the US Chamber of Commerce have warned that there may be steel shortages due to the war in Ukraine and related trade disruptions, and thus the removal of tariffs on such items is a good move.

Although a positive step in ameliorating trade relations with a US-ally, the scope of the new agreement between the US and the UK is limited. There is no indication from the US government that discussions as to a formal free trade agreement with the UK are high priority. In any event, statements from both UK and US officials indicate that the countries are committed to working together in advocating for rule of law trade policies and preservation of market-based economies, and otherwise addressing the “emerging challenges of today’s world.”

For any questions on imports of steel and aluminum or practical effects of the US-UK trade agreement on such imports, please contact a trade attorney at Barnes, Richardson & Colburn LLP.