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Section 201 Tariffs and Antidumping Measures Stop Imports that American Industry Needs

The Example of Cold-Rolled Steel

A little-understood facet of the infamous steel tariffs imposed by the President under Section 201 is that the President did not take steps to prevent the imposition of other trade remedies on the same steel. This means that steel products can be subject to 30 percent tariffs, antidumping duties and countervailing duties all at the same time. The combined effect of these measures makes importing needed steel all but impossible.

Cold-rolled steel is a graphic example of the combined effects of these trade restrictions. Cold-rolled steel is used by wide segments of American industry from automobiles, auto parts, construction, steel shipping containers, appliance and many other products. Imports are a small but important part of the market. Without them, U.S. steel using manufacturers are not competitive with foreign manufacturers in many product lines.

Antidumping duties are imposed on products where the U.S. selling price of a product is less than the selling price in the exporting market (e.g., Japan). The prices are compared after certain adjustments are made. One of the adjustments that the statute requires is that U.S. Customs duties must be deducted from the U.S. price before comparison.

Consider an example where the selling price of a cold-rolled steel product made in Japan is $400 per ton in Japan and $400 in the United States. Under the antidumping law, U.S. Customs duties are deducted before the comparison is made. The 30 percent tariff under Section 201 is considered a U.S. Customs duty. Therefore, the "comparison" price in a dumping case is reduced by 30 percent, or $120 in our example. The "dumping" margin, created by the Section 201 tariff, is 30 percent. All of a sudden, the $120 tariff becomes a $240 tariff, making the cost to the foreign producer prohibitive. Trade stops.

If a product exclusion for a steel product is granted, then the 30 percent 201 tariff will not be charged, and the $120 will not be deducted from the U.S. selling price.

The interaction of trade remedies has been prevented in previous steel import plans. Under the steel VRAs in the 1980s, for example, the quotas only applied to products for which there were no antidumping or countervailing duty cases pending. At that time, it was clearly recognized that the steel industry should choose one restriction. In this section 201 case, however, the Administration did not require a choice. U.S. steel producers may file antidumping cases and still benefit from the section 201 tariffs.

Cold-rolled steel antidumping cases were initiated by a petition filed September 28, 2001, in the midst of the section 201 investigation. While importers and U.S. steel users argued vigorously that simultaneous 201 tariffs and antidumping duties were manifestly unfair and unprecedented, the Administration did not listen. The U.S. producers, given the ability to stop trade regardless of its fairness, have used that ability fully in the case of cold-rolled steel.




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