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Mechanics of the 232 Investigation

July 3rd, 2018 by Mike Meyerhoff

Over the past few months, as we’ve seen the findings from the Section 232 investigation and President Trump’s executive actions to the same, there have been many blog posts and company reactions published with all manner of opinion…most of them biased one way or the other and reasonably so.  The effect of the speculation of what the investigation MAY prompt Trump to do followed by what Trump DID do has caused steel product managers to reshape the market on an almost weekly (and sometimes daily) basis.  What was sold for $1000/ton a month ago may no longer be available to bring back into inventory until next year so the price almost doubles.    Distributors looking for quick cash to make vital moves on strategic inventory items may actually sell select items BELOW costs.  Fabricators and OEMs seem to either be buying as much steel as they can before the next price increase, or holding up production in anticipation of some price relief.  And the opinions on this matter bounce around with the same amplitude as the prices themselves.  The only consistency right now seems to be that everyone has an opinion…hell yeshell no…or hellifIknow.  Personally, I’m a hellifIknow guy with hell yes tendencies which I define as being to hell with it…we’re here so let’s be sharp and make the most of things.  Which brings me to what I’m REALLY trying to say here which is that from a to hell with it point of view I’ve decided to make this a post outlining the actual decisions by the administration and leaving the opinion making to people smarter than I…or me…or…ah to hell with it…

In my last post I outline the very basic fundamentals of a Section 232 investigation.  If you somehow happened to miss that one and can’t sum up the effort to go check it out, in so many words I explain that there is a law (Section 232 of the Trade Expansion Act of 1962 (19 USC, 1862) that allows the President to set tariffs and quotas on imported goods, independent from congress ,if he thinks the importing of those goods harms our national security interests.   President Trump did exactly all of that and has put in place some tariffs and quotas on steel and aluminum imports.  I’m gonna do my best here to outline what exactly was done as well as give you the resources to go look it all up yourself should you feel so compelled…but be ye warned…reading Presidential Proclamations is like reading baby crib assembly instructions…in Russian…upside-down…with a hangover.  For the purposes of time, clarity (HA!), and my general peace of mind, we’re simply going to look at the official proclamations from the President which set the policy.

For readers just wanting the crib notes version,  basically all current steel and aluminum tariff policies related to the Section 232 investigation where implemented through six Presidential Proclamations – three regarding aluminum and three regarding steel – over the span of two months starting in early March 2018.   The fundamental policies set were as follows:

Duty requirements are effective for goods entered or withdrawn from warehouse for consumption on or after 12:01 a.m.  eastern time on March 23.

As of June 1, 2018 a 25% tariff will be applied to  steel products imported from all countries with the following exceptions: Argentina, Australia, Brazil, and South Korea.

As of June 1, 2018 a 10% tariff will be applied to aluminum products imported form all countries with the following exceptions: Argentina and Australia.

As of Jun 1, 2018 quotas will be set with regards to steel imports for the following countries: Argentina, Brazil, and South Korea.

As of June 1, 2018 quotas will be set with regards to aluminum imports from Argentina.

 

I spent more time than I’d like to admit searching for a clearly published schedule of the quotes, but most of what I found was listed by US Customs commodity codes…let me save you the pain of trying to cypher through those.  I DID find the link below which the weekly status report for the import of commodities.  You can use this to track the quotas on a weekly basis.

Weekly Commodity Status Reports

This link below will send to you the US Customs and Boarder Protection’s site concerning steel and aluminum tariffs.  I’ve found that from this link you can navigate as deep as you wish into this matter.

https://www.cbp.gov/trade/programs-administration/entry-summary/232-tariffs-aluminum-and-steel

 

My initial intention was to break down these proclamations a bit and explore the logic and the precedence for finding significant national security threats such as to warrant such unilateral executive action, but I found that a rabbit whole from which nobody would make it out alive.  Specifically what vexes me is how the remedy for this “national security threat” doesn’t really address our production capacity, but instead seems to be a bit of an end-around in a broader currency battle…later thought for a later post I suppose.