The US International Trade Commission has been working vigorously to come up with a response to foreign steel producers dumping steel below fair value. On March 1st they announced preliminary determinations in regard to antidumping duty (AD) and countervailing duty (CVD) investigations of important of certain cold rolled steel and strip from China. Seven countries in total will be included Brazil, China, India, Japan, Korea, Russia and the UK. These are some of our most important trade partners, but the AD will assist in ensuring that prices remain competitive to protect US based businesses.
Many of these countries are dumping their excess steel below fair value. This has a devastating impact on the wellness of businesses based in the United States. The AD will investigate these cases and will give US businesses and workers a means by which to seek relief from market distorting effects which are caused by the dumping of imports into the United States.
Chinese steel imports were hit with the largest tariffs, a 265.79% tariff has been placed on any business based in the country that is exporting steel to America. The reason for the inflated rate is because China refused to respond to requests by the US Commerce Department when they reached out to come up with a solution.
The US International Trade Commission will require US Customs and Boarder Protection (CBP) to collect cash deposits based on these preliminary rates.
These new tariffs can have a dramatic impact on where businesses will source their next shipment of steel. Brazil was hit with a 38.93% tariff on most businesses operating inside the country. China, is facing the most sever dumping margin at 265.79% on all steel exporters. India will be set at 6.78%. Japan will see a 71.35% increase on steel export tariffs. A 4.53% tariff from Korean based businesses. Russia is looking at a 14.76% charge. United Kingdom is one of the most interesting as they are a very close ally of the US. The UK will face a 28.03% charge for steel exports into the US.
Even though these tariffs, extremely severe in some cases, were put into place to protect US businesses they could have a negative impact on the value chain in America today. Many businesses based here in the US have been dealing with these countries for years. If they are already sourcing raw materials from China, for example, a 265.79% tariff will essentially remove any chance for them to compete. This could put employees at risk and companies out of business. A less damaging plan must be decided on before these tariffs take effect. As of now the US Commerce Department will be scheduled to makes its preliminary CVD determination in May of this year and preliminary AD determination in July 2016.
Only time will tell the true impact of these new AD laws but in the short term it seems as if damage might be done to the very businesses that the US International Trade Commission wishes to protect. However, without any investigation into dumping steel at prices ranging from 51.07 % to 76.54% below fair value, American businesses will continue to face unfair competition from foreign countries.
This will be an ongoing process to determine the best course of action to protect businesses here at home. There are still ongoing discussions about how to deal with steel being imported into the US at below fair value. Check back soon for the latest updates on this developing issue.