Update: WTO rules against Trump tariffs on steel, aluminum

Bloomberg is reporting that the World Trade Organization (WTO) has said the United States violated trade rules when it imposed Section 232 steel and aluminum tariffs in 2018 that then President Donald Trump said were necessary to protect America’s national security. The news service cites an email from Norway’s Foreign Ministry as its source. Later that same day, Dec. 9, the WTO circulated its dispute panel reports for the cases brought by China, Norway, Switzerland and Turkey, stating that it did not find, "based on the evidence and arguments submitted in this dispute, that the measures at issue were 'taken in time of war or other emergency in international relations' within the meaning of Article XXI(b)(iii) of the GATT 1994" and therefore were not justified.

Bloomberg says the decision could increase pressure on President Joe Biden to reconsider the internationally unpopular tariffs aimed at protecting U.S. manufacturing jobs. However, Assistant United States Trade Representative Adam Hodge released a statement in response to the WTO panel's findings rejecting its “flawed interpretation and conclusions."

He says, "The United States has held the clear and unequivocal position, for over 70 years, that issues of national security cannot be reviewed in WTO dispute settlement and the WTO has no authority to second-guess the ability of a WTO Member to respond to a wide range of threats to its security.

The U.S. can effectively veto the decision by filing an appeal within the next 60 days, Bloomberg reports, adding that WTO appeals cannot be heard presently because the Trump administration paralyzed the appellate body in 2019.

Jan. 11, 2018, then Secretary of Commerce Wilbur Ross presented Trump with the results of the department’s investigation into the effect of steel mill product imports on U.S. national security. Soon after, the Department of Commerce published its report addressing the implications of aluminum imports on national security.

The tariffs were introduced in March and July 2018, imposing a 25 percent duty on steel and a 10 percent duty on aluminum imports from nearly every country in the world. Argentina, Brazil and South Korea agreed to quotas, while Australia received a full exemption. In May 2019 the tariffs on steel and aluminum from Canada and Mexico were dropped.

Bloomberg reports that the Trump administration enacted the tariffs despite former U.S. Defense Secretary James Mattis’ warning that the duties were not necessary for the country to meet its “national defense requirements” and could have a “negative impact” on America’s allies.

The American Iron and Steel Institute, Washington, has voiced its support for the tariffs. Just last year, the association said a report by the Economic Policy Institute (EPI) “reaffirms that the steel tariffs have been effective in facilitating significant investments in new and upgraded mills, creating thousands of new jobs and protecting U.S. national security, and that continued global steel overcapacity fueled by foreign government subsidies and other trade-distorting policies and practices threatens additional harm to the American steel industry absent continuation of the tariffs.”

In response to the EPI report, Kevin Dempsey, president and CEO of AISI, said, “This study makes it abundantly clear that the steel tariffs are working. We commend the economic analysis conducted by EPI which confirms that, due largely to the Section 232 steel tariffs, the American steel industry has been able to invest nearly $16 billion to build, upgrade or expand steel facilities while also enabling the industry to effectively restructure. While these investments have created 3,200 new jobs, the tariffs kept many more workers on the job as the industry was threatened by significant challenges from foreign government trade-distorting policies and practices that have created substantial steel overcapacity worldwide. We are pleased that the report also recognizes that those challenges still exist and that keeping the steel tariffs in place is critical until a permanent solution to the chronic problem of excess global steel production capacity is achieved. We urge that opinion leaders, policymakers and steel partners all across the U.S. take a look at this important new report and work to ensure that steel tariffs remain in place.”

The Aluminum Association, Arlington, Virginia, in May of last year following the joint commitment by the U.S. and EU to address overcapacity in the global aluminum market, said it has advocated for a strong, multilateral effort to address global aluminum excess capacity driven by overproduction in China. However, three years of Section 232 tariffs have done little to change Chinese practices, the association added, citing a report by the Organization for Economic Cooperation and Development (OECD). 

The association called for a number of trade policy changes at that time, including implementing immediate reforms to Section 232 exclusion process, carefully considering countrywide exemptions to the Section 232 aluminum tariffs on countries committed to market-based trade, continuing robust trade enforcement and maintaining Section 301 tariffs on aluminum imports, prioritizing multilateral efforts to combat unfair global trade practices and harmful industrial subsidies, launching the new Aluminum Import Monitoring system and carefully tracking aluminum trade flows and outlining a comprehensive policy with long-term federal investment to ensure a stable and resilient domestic aluminum capacity amidst a global supply chain.

*This article was updated Dec. 13 to add the link to the panel reports and the statement from Hodge.