Unpredictable tariffs

Unpredictable tariffs

February 10, 2020 | By Keith Martin in Washington, DC

Unpredictable tariffs remain a threat to project economics.

President Trump issued a proclamation on January 24 imposing import tariffs on products made from steel or aluminum where the metals account for at least two thirds of the product value. The tariffs are 25% for steel and 10% for aluminum. They will apply to products made from steel or aluminum that enter the US or are removed from bonded warehouses after February 7, 2020.

The tariffs will apply only to a short list of products that the government published in the Federal Register on January 29.

Wind turbines are 71% to 79% steel, but are not on the list.

It is unclear whether the lists will be updated. The proclamation said the government is focused on so-called derivative products made from steel and aluminum that have three features in common. First, the metals account for at least two thirds of the product value. Second, import volumes increased year to year after June 1, 2018 compared to the two years before. Third, the import volumes after June 1, 2018 are up by more than 4%, which is the average increase in all US imports during the same period.

Products imported from Argentina, Australia, Canada, Mexico — and, in the case of steel products only — Brazil and South Korea will not be affected.

Trump said he imposed the additional tariffs because domestic steel and aluminum mills are still not operating at least at 80% capacity, a level he says is needed to ensure US national security.

Separately, the administration is moving to impose anti-dumping and countervailing duties on wind towers imported from Canada, Indonesia, Korea and Vietnam. The US Commerce Department found in January that towers from the four countries are being dumped at discounts below market of 5.04%, 6.38%, 5.98% and 65.96%, respectively. This is on top of countervailing duties of 1.09% to 20.29% that it recommended be collected on wind towers from Canada, Indonesia and Vietnam. A coalition of US wind tower manufacturers had wanted dumping duties of 422% for Korea and 109% for Vietnam.

These are preliminary duties. The Commerce Department hopes to issue the final duties on April 20 for Vietnam and on June 25 for the other three countries.

The focus shifts next to the US International Trade Commission, which must find that US producers have been injured or are threatened with injury from illegally traded imports. Importers are required in the meantime to deposit the preliminary duties or post bonds.

Meanwhile, US solar developers are waiting for the results of a mid-term review of a “safeguard” duty that the Trump administration imposed on imported solar panels in February 2018. The duties are currently scheduled to remain in place for four years and to fall from 30% to 15% by the last year of the four-year period. They have been declining by 5% a year.

Suniva, one of two panel manufacturers that asked for the original duties to bolster US manufacturing operations, asked to slow the rate of decrease to 1% a year.

Rhonda Schmidtlein, a Democratic member of the US International Trade Commission, said at a December 5 hearing on the tariffs that “I think technically if the president wanted to he could extend the safeguard beyond 2021.”

The commission released a 488-page mid-term review on February 7, but without making any recommendations. The report is a survey of how the tariffs have affected US solar cell and module manufacturers.

The US Trade Representative is moving at the same time to revoke a tariff exemption for imported bi-facial solar panels. The trade representative granted the exemption in June 2019 and then withdrew it four months later, but a federal court blocked it from withdrawing the exemption until it followed proper procedures. (For earlier coverage, see “Solar and Wind Tariffs” in the December 2019 NewsWire.) The US Trade Representative put a request for comments in the Federal Register on the January 27, starting a 60-day clock to run on comment submissions. Soon after, the government is expected to withdraw the exemption again.

Finally, a draft executive order is reportedly circulating within the Trump administration to pull the United States from a 48-country Government Procurement Agreement. The GPA treaty allows companies in countries that are parties to the agreement to bid to supply goods and services in each other’s government procurements. The Government Accountability Office, an arm of the US Congress, said in a 2017 report that the US has allowed other countries to bid on about $837 billion in procurement contracts, while the next five largest signatories – the European Union, Japan, South Korea, Norway and Canada – have opened only $381 billion to outside bids.