US to Cut Quotas on Brazilian Steel
The U.S. will tighten quotas on Brazilian steel exports because the steel market has contracted in 2020, President Donald Trump said in a proclamation, issued at 10:30 p.m. on Aug. 28. Domestic producers have shipped 15% less across the first half of 2020 than in the previous year, which is more than the decline in demand, Trump said. Imports from most countries have declined this year in a manner commensurate with this contraction, whereas imports from Brazil have decreased only slightly, the proclamation said.
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However, because some steel production in the U.S. relies on Brazilian inputs, the proclamation allows for exceptions from the quota restriction for blooms, billets and slabs, semi-finished, usually under subheadings 7207.11.00, 7207.12.00, 7207.19.00, 7207.20.00 or 7224.90.00. The exceptions apply for companies that already contracted for these items, as long as the contract specifies quantities through the end of 2020, and if executives certify business would be disrupted without the exception. The annex to the proclamation hasn't been released yet.
Those exceptions cannot be more than 60,000,000 kilograms in the aggregate, the proclamation says. The Office of the U.S. Trade Representative says the quota for the semi-finished steel products -- not counting these exceptions -- will be 60,000 metric tons, down from 350,000 metric tons. Until the 60,000 metric tons ceiling is met, the imports that were already contracted for will count against that limit.
The proclamation said the quota restrictions went into effect at 12:01 a.m. Aug. 28, more than 10 hours before the proclamation was issued. In December, Brazil and the U.S. will discuss the steel trade to see how 2021 quotas should be handled, but as of now, the quotas are to return to the previous levels. According to Reuters, Brazil expressed confidence that quotas would return to previous levels, or even more trade could happen in steel between the two countries next year.
On Aug. 31, the USTR publicized the earlier proclamation with a press release. The release also revealed that consultations between Mexico and the U.S. on steel imports from Mexico were successful in avoiding tariffs or quotas on Mexican goods, despite the “recent surges in imports from Mexico of three steel products: standard pipe, mechanical tubing, and semi-finished products.” The USTR said Mexico will do strict export monitoring of these products through June 1 of next year.
The American Iron and Steel Institute said it appreciates the administration's efforts to address steel imports affecting American producers in a time when demand has declined significantly. It said raw steel production is down 20% so far this year compared with the same period last year.