Section 232 Tariffs – Pathway to Climate Protection or Managed Trade?

November 11, 2021

On October 30, the US and the EU announced a deal that replaces Trump-era US tariffs on EU steel and aluminum under Section 232 of the Trade Expansion Act of 1962 with a quota system.

Section 232 is the ‘national security’ bludgeon the US has used since 2018 to levy 25-percent tariffs on EU steel and 10 percent on its aluminum exports to the US.

The deal will replace the Section 232 tariffs with a tariff rate quota (TRQ) scheme allowing imports of steel and aluminum from the EU up to certain agreed annual volumes – reports suggest 3.3 million tons – to enter the US duty-free. Imports over those volumes will be subject to duty. Prior to the imposition of the Section 232 tariffs, imports of steel from the EU to the US amounted to about 5 million tons.

To be eligible, the steel must be melted and poured in the EU. Exemptions that the US granted respecting certain categories of steel will continue in effect.

In return, the EU will eliminate tariffs on several US-made goods – motorcycles, bourbon, peanut butter and jeans – imposed as retaliation. The EU is also dropping its Section 232-related WTO challenges.