Industry News

US-Japan Tariff Rate Quota (TRQ) on Steel Now in Effect

Apr. 12, 2022

Earlier this month, on April 1, 2022, the tariff-rate quota (TRQ) on steel imports from Japan went into effect. Accordingly, Customs issued a CSMS with guidance on the TRQs implementation and instructions for importers.

The TRQ was announced by the United States and Japan in February of this year. The agreement permits “historically-based sustainable volumes of Japanese steel products to enter the U.S. market without the application of Section 232 tariffs.”

The TRQ replaces the 25% percent tariff for an aggregate import volume of 1.25 MMT across 54 product categories and removes imports of Japanese derivative steel articles from the scope of Section 232 tariffs entirely. The TRQ will be allocated on a first-come, first-serve basis for the various product categories. Any steel-products that exceed the quota will be assessed at the 25% duty rate of Section 232. Note the exclusion process administered by the Department of Commerce remains in effect for steel products imported from Japan and thus any importer of out-of-quota volumes of Japanese steel can still seek duty relief thereunder.

The first quarterly evaluation of the utilization and administration of the TRQ is set for July 2022. The U.S. is also committed to conducting an annual review to calculate the level of U.S. steel demand so as to adjust the TRQ volume accordingly.

The deal the U.S. has reached with Japan is the latest in a string of bilateral and bloc agreements the U.S. has entered, offering broad relief from Section 232 actions on steel to historic trading partners in an attempt to remedy rifts that resulted under trade policies of the prior Administration. These agreements also incorporate a green agenda; the U.S.-EU agreement has the stated goal of reducing carbon emissions from steel and aluminum production. In the joint statement from the U.S. and Japan in the wake of the TRQ agreement, the countries commit to:

entering into discussions on global steel and aluminum arrangements to address both global non-market excess capacity as well as the carbon intensity of the steel and aluminum industries….[and] confer[ing] on methodologies for calculating steel and aluminum carbon-intensity…,shar[ing] relevant data, including relating to emissions in the steel and aluminum sectors.

The recent TRQ actions are also widely thought to be the right move for the domestic steel industry and offer more protections for American jobs. Additionally, such agreements are a part of more comprehensive and unified agenda to combat China’s “anticompetitive, non-market trade actions in the steel sector” as explained by USTR Tai in the a brief press statement from Feb 2022.

The instructions for importers of Japanese steel covered under the TRQ can be found here and the quota status can be tracked by members of the trade community here.

For any questions in importing Japanese steel under the recently effective TRQ or importing steel under any other TRQ or steel or aluminum subject to Section 232 duties, please contact a trade attorney at Barnes, Richardson & Colburn.