Author Archives: Fouad Egbaria

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The European Union announced Wednesday that it will impose duties on a list of U.S. products, worth approximately €2.8 billion, in response to the U.S.’s steel and aluminum tariffs. The 25% duty will go into effect Friday, June 22.

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The U.S.’s 25% duty on steel imports and 10% duty on aluminum imports went into effect after the U.S. announced at the end of May that it would not continue the temporary exemptions from the tariffs for the E.U., Canada and Mexico.

The list of U.S. products that will be subjected to the tariffs includes steel and aluminum products, in addition to agricultural goods and a “combination of other various products.” Other products subject to the duty include bourbon, motorcycles and orange juice. (A full list of the products is available here.)

“By putting these duties in place the EU is exercising its rights under the World Trade Organisation (WTO) rules,” a release on the European Commission’s website states.

Echoing previous comments, E.U. Trade Commissioner Cecilia Malmstrom alluded to the rules of international trade in justification of the move.

“We did not want to be in this position,” Malmstrom said in a prepared statement. “However, the unilateral and unjustified decision of the US to impose steel and aluminium tariffs on the EU means that we are left with no other choice. The rules of international trade, which we have developed over the years hand in hand with our American partners, cannot be violated without a reaction from our side. Our response is measured, proportionate and fully in line with WTO rules. Needless to say, if the US removes its tariffs, our measures will also be removed.”

The E.U. duties on U.S. goods will be “effective for as long as the US measures are in place, in line with the WTO Safeguards Agreement and EU legislation,” according to the release.

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“The EU will rebalance bilateral trade with the US taking as a basis the value of its steel and aluminium exports affected by the US measures,” the statement continues. “Those are worth €6.4 billion. Of this amount, the EU will rebalance on €2.8 billion worth of exports immediately. The remaining rebalancing on trade valued at €3.6 billion will take place at a later stage – in three years’ time or after a positive finding in WTO dispute settlement if that should come sooner.”

The U.S. Department of Commerce. qingwa/Adobe Stock

This morning in metals news, the U.S. released the first round of exclusion request responses vis-a-vis the Section 232 steel tariff, copper bounces back and ThyssenKrupp looks to form a joint venture in China.

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Exclusion Time

The U.S. Department of Commerce announced Wednesday evening that it had begun granting Section 232 exclusion requests.

“This first set of exclusions confirm what we have said from the beginning – that we are taking a balanced approach that accounts for the needs of downstream industries while also recognizing the threatened impairment of our national security caused by imports,” Commerce Secretary Wilbur Ross said in a prepared statement.
The DOC announced it had decided to grant 42 exclusions. The seven requesting companies import steel products from Japan, Sweden, Belgium, Germany and China, according to the DOC release.
The seven companies receiving the exclusions are:
  • Schick Manufacturing, Inc. of Shelton, Connecticut
  • Nachi America Inc. of Greenwood, Indiana
  • Hankev International of Buena Park, California
  • Zapp Precision Wire of Summerville, South Carolina
  • U.S. Leakless, Inc. of Athens, Alabama
  • Woodings Industrial Corporation of Mars, Pennsylvania
  • PolyVision Corporation of Atlanta, Georgia

In addition, the DOC said it would be denying 56 steel tariff exclusion requests from 11 different companies.

Copper Moves Away From Three-Week Low

The price of copper recovered on the heels of hitting a three-week low, as measures by the Chinese government could work to augment demand in the country, Reuters reported.

Three-month LME copper moved up 0.4% on Thursday, according to the report.

ThyssenKrupp JV in China

German firm ThyssenKrupp — which has been in the news of late in the context of its joint venture plans with Tata Steel — has plans to team up with two companies to produce steel wheels in China, according to Reuters.

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ThyssenKrupp would enter a JV with Zhejiang Jingu and Ansteel, according to the report, with the German firm owning 34% of the JV.

The U.S. Department of Commerce (DOC) issued an affirmative preliminary ruling this week in its anti-dumping investigation of imports of common alloy aluminum sheet.

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“The association and its member companies that produce common alloy aluminum sheet are very pleased with this finding that again underscores the Commerce Department’s commitment to combatting unfair trade,” said Heidi Brock, president and CEO of the Aluminum Association, in a prepared statement. “For too long, the Government of China has been unfairly and illegally subsidizing its aluminum industry, leading to massive market overcapacity and challenging producers across the value chain.  Today’s action by the Commerce Department is exactly the kind of strong, targeted trade enforcement we need in support of the rules-based global trading system.”

The DOC announced in November that it would self-initiate anti-dumping and countervailing duty investigations of common alloy aluminum sheet imports from China (typically, cases are initiated after a domestic producer files a petition with the Department of Commerce). The move marked the first self-initiated investigation by the DOC in over 25 years.

The DOC calculated preliminary antidumping margins of 167.16% of the value of the imported aluminum sheet.

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A final determination from the DOC in the anti-dumping probe is expected in late October or early November.

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This morning in metals news, the European Union plans to import retaliatory tariffs against the U.S. this week, Canada is considering aid to auto companies in light of proposed U.S. auto tariffs and President Trump’s trade adviser defends the administration’s tariff strategy.

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E.U. to Strike Back

The E.U. will impose tariffs on the U.S. this Friday in response to the latter’s steel and aluminum tariffs, Reuters reported.

The new 25% duty will impact a wide range of items, including farm products, bourbon, jeans and motorcycles, according to the report.

Canada Prepares to Rev Up Potential Auto Tariff Response

On another U.S. trade front, Canada says it is prepared to provide financial aid to the auto industry should the U.S. impose auto tariffs, Reuters reported.

“The message I would convey to the auto sector workers is – we have your backs,” Innovation Minister Navdeep Bains was quoted as saying.

Trump Trade Adviser Defends Potential $200B in Tariffs

President Trump’s trade adviser, Peter Navarro, defended the recent announcement in which the president directed the U.S. Trade Representative to identify an additional $200 billion in Chinese goods to be subjected to a 10% tariff.

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“No one should be surprised,” Navarro was quoted as saying. “President Trump has given China every chance to change its aggressive behavior.”

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In a letter dated June 18 to Canadian Prime Minister Justin Trudeau, Canadian Chamber of Commerce CEO and President Perrin Beatty — along with nine heads of provincial Chambers of Commerce — wrote to express “support for the government’s efforts to defend Canadian interests in the face of unprecedented trade actions by the United States government.”

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The U.S. announced May 31 that it would impose its Section 232 steel and aluminum tariffs on Canada (as well as Mexico and the European Union), ending the temporary exemption for the country from the duties.

Canada was the world’s 19th-largest steel exporter last year. In 2017, 90% of Canada’s steel exports went to the U.S. (the second-largest export market, Mexico, came in at 7%).

“We fully support the government’s firm position that steel and aluminum exports from Canada do not pose a national security threat to the U.S. Our members are on the front lines of the cross-border supply chains that help drive the Canadian and American economies and support mutual national security through our joint defence industrial base,” the letter reads.

In the letter, Beatty supported the “dismantling of trade barriers,” while arguing the U.S. tariffs have forced Canada’s hand.

“However, the American government’s actions leave our country no choice but to respond in a fashion designed to encourage the withdrawal of U.S. steel and aluminum tariffs at the earliest possible opportunity,” the letter reads. “We urge the government to maintain an open dialogue with Canadian businesses to ensure that any unintended consequences for companies and workers are mitigated, particularly in those sectors that are most trade-dependent.”

According to U.S. Census Bureau data, the U.S. had a $4.55 billion deficit in goods with Canada through the first four months of 2018. The U.S. had a $17.05 billion deficit with Canada in 2017.

“Despite the unprecedented environment created by the U.S. government’s actions, we fully support the government’s continued efforts to achieve a modernized North American Free Trade Agreement,” the letter concludes. “Canadian negotiators should remain at the table and not allow the illegal and unjustified U.S. steel and aluminum tariffs to derail negotiations for an agreement that meets 21st century business needs.”

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The other signatories to the letter, all presidents of their respective Chambers of Commerce, were (province in parentheses): Ken Kolby (Alberta), Trevor Wever (Northwest Territories), Sheri Somerville (Atlantic), Rocco Rossi (Ontario), Val Litwin (British Columbia), Steve McLellan (Saskatchewan), Stephane Forget (Quebec), Peter Merrick Turner (Yukon) and Chuck Davidson (Manitoba).

Speaking of Chambers of Commerce, the U.S. Chamber of Commerce last week panned the U.S. announcement on tariffs to be placed on Chinese imports.

“Imposing tariffs places the cost of China’s unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers, and ranchers,” U.S. Chamber of Commerce President and CEO Thomas J. Donohue said in a prepared statement on the Chamber’s website. “This is not the right approach.”

The U.S. Department of Commerce. qingwa/Adobe Stock

The U.S. Department of Commerce last week announced it had launched a new anti-dumping probe with respect to steel propane cylinders from China, Taiwan and Thailand. The DOC also launched a countervailing duty probe of the steel propane cylinders from China.

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The DOC calculated dumping margins of:

  • 55.41-108.60% for China
  • 27.19-66.20% for Taiwan
  • 47.67-122.48% for Thailand
“There are 18 alleged subsidy programs for China (two loan programs, three export credit/guarantee programs, five tax programs, three provision of goods for less than adequate remuneration programs, and five grant programs),” the DOC release covering the announcement states.
According to the DOC, the value of 2017 imports of the product from China, Taiwan, and Thailand were valued at an estimated $89.8 million, $10.1 million, and $14.1 million, respectively.
Petitions in the case were filed May 22 by Worthington Industries (of Columbus, Ohio) and Manchester Tank & Equipment Co. (of Franklin, Tennessee).

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Imports of the cylinders from the countries in question surged last year.

According to Census Bureau data included in the DOC fact sheet, imports from China in 2017 were up to 4,006,413 units from 2016’s 1,613,360 units. Imports from Taiwan and Thailand also increased significantly year over year.

The next step in the case is a preliminary ruling by the U.S. International Trade Commission, which is due to make a preliminary decision by July 6.

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Despite a brief window last month in which trade tensions between the U.S. and China seemed to have deescalated, said tensions have resumed apace in recent days.

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On Friday, the U.S. announced the list of just over 1,100 products worth $50 billion that are targeted for a 25% duty in two stages (with the first, worth $34 billion, set to go into effect July 6). Then, on Monday, President Donald Trump directed the U.S. Trade Representative to identify an additional $200 billion in goods to be subjected to a 10% import tariff.

“I support the President’s action,” USTR Robert Lighthizer said in a prepared statement. “The initial tariffs that the President asked us to put in place were proportionate and responsive to forced technology transfer and intellectual property theft by the Chinese. It is very unfortunate that instead of eliminating these unfair trading practices China said that it intends to impose unjustified tariffs targeting U.S. workers, farmers, ranchers, and businesses. At the President’s direction, USTR is preparing the proposed tariffs to offset China’s action.”

According to the USTR release: “USTR will announce the additional tariffs proposed and provide a similar legal process as the proposed tariffs announced on April 3, 2018 and which are now implemented. No additional tariffs will go into effect until the legal process is complete.”

The U.S. decision came on the heels of China’s announcement that it would impose retaliatory tariffs to counteract the $50 billion in U.S. tariffs on Chinese goods.

Unsurprisingly, China reacted negatively to the news.

“Such practice of imposing extreme pressure and blackmailing is contrary to the consensus the two sides have reached through rounds of consultations, and disappoints the international community,” a China Ministry of Commerce spokesperson said, as quoted by the state-run Xinhua News Agency.

“The trade war waged by the United States is against both the law of the market and the development trend of today’ s world. It undermines the interests of the Chinese and American people, the interests of companies and the interests of the people all over the world.”

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The spokesperson added “that if the United States loses its rationality and unveils another list of Chinese products for additional tariffs, China will have no choice but to take comprehensive measures combining quantitative and qualitative ones to resolutely strike back,” according to the Xinhua report.

“China does not want a trade war, but it does not fear one,” said Geng Shuang, a Foreign Ministry spokesman, during a press briefing Tuesday, as quoted by Xinhua.

Source: wto.org

Norway became the latest country to request consultations at the World Trade Organization (WTO) with the U.S. over its Section 232 steel and aluminum tariffs. The dispute complaint was circulated to WTO members June 19.

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“In Norway’s view, the additional tariffs imposed by the US on steel and aluminium imports are a violation of the WTO rules,” Minister of Foreign Affairs Ine Eriksen Søreide said in a prepared statement last week. “Today we have therefore requested dispute settlement consultations with the US in the WTO. The WTO and its dispute settlement system is the established forum for handling disagreements about trade policy.”

Norway, which is home to aluminum producer Norsk Hydro, is Europe’s top aluminum producer (the country is not a member of the European Union, but has membership in the European Economic Area).

According to the release from Norway’s Ministry of Foreign Affairs, only 0.2% of Norway’s steel and aluminum exports go to the U.S.

“In the long run, we all benefit from a situation where right trumps might in international trade,” Eriksen Søreide said. “Such a disregard for WTO rules weakens the credibility of the United States in international trade, and risks undermining the rules based multilateral trading system.”

India initiated a complaint against the U.S. tariffs in May. Mexico also requested consultations, while the E.U. and Canada have also done so.

Trade tensions have picked up in recent months, as the U.S. tariffs have sparked backlash from some of the U.S.’s closest trading partners. The WTO has come in for much criticism from President Trump, but figures to be a battleground — albeit a slow-moving one — for trading partners formally objecting to the U.S. tariffs.

In addition, last weekend the G7 summit in Charlevoix, Quebec, during which trade issues were paramount, ended acrimoniously when Trump tweeted that he would withdraw his support for the summit’s communique.

The communique, among other things, addressed tariffs:

“We acknowledge that free, fair and mutually beneficial trade and investment, while creating reciprocal benefits, are key engines for growth and job creation. We recommit to the conclusions on trade of the Hamburg G20 Summit, in particular, we underline the crucial role of a rules-based international trading system and continue to fight protectionism. We note the importance of bilateral, regional and plurilateral agreements being open, transparent, inclusive and WTO-consistent, and commit to working to ensure they complement the multilateral trade agreements. We commit to modernize the WTO to make it more fair as soon as possible. We strive to reduce tariff barriers, non-tariff barriers and subsidies.”

In a meeting Monday after the G7 dust had settled, German Chancellor Angela Merkel met with several leaders of multilateral agencies to stress the importance of cooperation.

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“Rising trade tensions risk a major economic impact, undermining the strongest sustained period of trade growth since the financial crisis,” WTO Director-General Roberto Azevêdo said in a joint statement. “They also pose a real systemic threat, risking far greater impacts in the longer term. We will continue working to resolve these tensions and to avoid further, damaging escalation which draws in new sectors, potentially harming more workers.”

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This morning in metals news, energy companies are lobbying for exemptions from the U.S. steel tariff, U.S. steel exports dropped in April compared with the previous month, and steel and iron ore prices fell by the greatest amount since March.

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Asking for Exemptions

Several U.S. energy companies are looking to win exemptions from the U.S.’s 25% steel tariff, Reuters reported.

Of the nearly 21,000 exclusion requests received by the U.S. Department of Commerce, more than 500 are related to pipes and related materials, according to the report.

U.S. Steel Exports Down in April

The U.S.’s steel exports fell by 1% in April compared to the previous month, according to American Iron and Steel Institute (AISI) data cited by the Times of Northwest Indiana.

The steel export level in April, however, was up 0.5% compared with April 2017.

Steel Prices Drop

Prices of steel and iron ore fell by the greatest amount since March, according to Bloomberg, as trade tensions ratcheted up in the last week. The U.S. announced $50 billion in tariffs on Chinese imports on Friday, and President Donald Trump threatened an additional $200 billion in tariffs.

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Iron ore prices fell to a two-month low, according to the report, while LME nickel, zinc and copper all also fell.

Last week Rio Tinto announced a new 50-50 joint venture with Beijing-based Minmetals, a partnership that will seek to explore “world-class mineral deposits” in China.

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According to a Rio Tinto release, the registered capital of the joint venture amounts to $31.3 million, plus initial contributions of $5.5 million by both Rio Tinto and Minmetals within six months of the establishment of the joint venture.

“The formalisation of the exploration joint venture is an important milestone in our growing partnership with China and Minmetals, who is an increasingly important player in the global mining industry,” Rio Tinto CEO J-S Jacques said in a prepared statement. “Our complementary strengths in exploration put us in the best possible position to find metals and minerals essential to human progress.”

China Minmetals Corporation President Guo Wenqing underscored the parties’ complementary expertise.

“The collaboration is very significant to Minmetals,” he said. “Rio Tinto has rich prospecting experience and great discoveries worldwide, while Minmetals has solid technical expertise and extensive experience – the two strong partners will drive breakthroughs, pioneer progress, and promote the exchanges and collaboration of the global resource industry.”

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The parties signed a Technical Collaboration Agreement in November 2017.