The International Trade Commission released its comprehensive review of the economic impact of the 2018 tariff action protecting American Steel and Aluminum and those penalizing importers of Chinese goods.
The tariffs were based on national security investigations pursuant to section 232 on steel and aluminum, and a section 301 investigation concerning China’s "acts, policies, and practices related to technology transfer, intellectual property, and innovation."
The Commission estimates that tariffs under sections 232 and 301 resulted in a nearly one-to-one increase in prices of U.S. imports following the tariffs. This implies that a 10 percent ad valorem tariff raised the price of U.S. imports from China by about 10 percent.
This nearly complete pass-through (meaning that prices received by exporters were largely unaffected and prices paid by U.S. importers increased by the same amount as the tariffs) is unusual but has been similarly found by other recent studies, which conclude that U.S. importers have borne almost the full burden of section 301 tariffs.
Steel & Aluminum
Imports of steel decreased in the years following the imposition of the tariffs, declining 17.2 percent from 2017 to 2021. The steel industry’s capacity utilization increased from 2017 to 2021, with capacity utilization at a 14-year high in 2021.
The prices of hot-rolled steel coil in the U.S. at the end of 2021 were more than quadruple those at the beginning of 2016. Although prices have increased globally since 2018, the increase has been much higher in the United States than elsewhere. Elsewhere the report cites
Imports of aluminum have generally been lower since the imposition of the tariffs, declining by 19 percent from 2017 to 2021. Aluminum prices show an overall increase of 45 percent between December 2017 and December 2021, and reaching their highest levels in 13 years in October 2021.
The report notes that factors other than the tariffs have affected trade, production, and prices in the U.S. steel and aluminum industries. These factors include the COVID- 19 pandemic, supply chain disruptions, antidumping and countervailing duty (AD/CVD) orders, a surge in energy prices, global responses to the tariffs, and Russia’s invasion of Ukraine
The tariffs are estimated to have increased the prices of imported steel and aluminum products subject to the duties by about 22.7 percent and 8.0 percent, respectively.
The report notes that the impetus for the metals tariffs is National Security, not consumer welfare. The US was world’s largest aluminum producerat the turn of the contury, with 23 smelters in operation. By 2016, the U.S. accounted for just 1.5 percent of global production. In the same time frame, production of primary aluminum in China grew from less than 15 percent of global production in 2000 to about 55 percent in 2016.
301 China Tariffs
Under Section 301, the Trade Representative initially imposed additional ad valorem duties of 25 percent on approximately $34 billion of imports classifiable under 818 HTS subheadings (tranche 1)
Subsequent rounds of actions led to the imposition of additional ad valorem duties of varying rates on imports under approximately 10,121 tariff subheadings.
The model estimates that section 301 tariffs resulted in a 13 percent drop in the value of U.S. imports from China on average in sectors affected by the tariffs.
Commisioner Kearns' Addendum
Commissioner Jason E. Kearns included an appendix noting the report fails to "describe or estimate the impact of China’s unfair trade practices that led to the imposition of those tariffs, nor does it describe the serious and persistent efforts over many years to persuade China to act more responsibly as a trading partner, nor how those efforts yielded paltry results."
"In my view," continued Mr. Kearns, "that history must be well understood as we try to assemble a complete picture of the costs and benefits of the section 232 and 301 tariffs—actions authorized by Congress, taken by one Administration and continued by another. It demonstrates that the United States could not have been more patient as it tried to persuade China to change course."
Comments
No comments on this item Please log in to comment by clicking here