On October 31, 2021, the Commerce Department announced that the United States had reached an agreement with the European Union (“EU“” To “replace” or “supplement” the 25% steel and 10% aluminum tariffs imposed by the United States under section 232 of the Trade Expansion Act of 1962 with a new quota tariff (“tariff quota“) from 1 January 2022. Under the tariff quota, imports of eligible steel and aluminum products from the EU will enter duty free of Article 232 customs duties until the quota is reached, after which they will be subject to customs again unless the product has been granted an exclusion in accordance with the section 232 exclusion request process, which will remain in place. the framework of an exclusion will not be taken into account in the amount of the quota, thus the tariff quota offers the possibility of achieving substantial duty savings for importers who meet its eligibility criteria.
The tariff quota will be administered on a quarterly basis for steel and semi-annually for aluminum, and the overall amount of the annual quota will be distributed among 54 categories of steel quota and 16 categories of aluminum quota identified by the tariff schedule. harmonized (“HTS”), With an amount in each category allocated to each EU Member State on the basis of historical levels. Quota categories and unofficial and anticipated annual quotas identified by quota category and distributed among EU member states are available on the Commerce Department’s Office of Industry and Safety (“BIS”) Websites for steel and for aluminum. Once finalized, official quotas will be published in US Customs and Border Protection (“CBP”) Quota bulletins. The use of quotas will be published in CBP Product Status Reports.
The tariff quota will be allocated to individual importers on a first come, first served basis, the quota being divided proportionally between importers at the opening of the quota in the event that the tariff quota is filled immediately on the first day of the quarter (steel) or in the middle of the year (aluminum). Once each EU Member State’s quota for each quota category is filled, subsequent imports will be subject to Article 232 tariffs of 25% for steel and 10% for aluminum (except if an exclusion has been granted) until a new TRQ amount opens at the start of the next quarter (steel) or mid-year (aluminum). Assuming the quotas fill up, this creates an incentive to import at the start of the quarter or half, as the case may be, in order to have the best chance of securing duty-free entry under Article 232 under the tariff quota. Note that the regular CBP fees are not affected by this tariff rate quota system and must continue to be paid.
It is important to note that in order for a steel or aluminum product to be eligible for Article 232 duty-free entry under the tariff quota, the product must have a country of origin of a Current EU member state (eg products with a UK country of origin are not eligible). In addition, for steel products, the country of “smelting and casting” must also be a current EU member state (e.g. steel smelt and cast in China but substantially processed into a finished steel product in Germany n is not eligible). Under relevant CBP regulations, the country of “melt and sink” is: “the original location where the raw steel is: (A) Produced first in a steel furnace in the liquid state; then (B) cast in its first solid form. The first solid state can take the form either of a semi-finished product (slab, billets or ingots) or of a finished steel mill product. It is essential that importers retain proof of eligibility. This usually includes a factory test certificate in the case of steel. For aluminum, a certificate of analysis is required.
Additional details regarding tariff rate quotas for steel and aluminum are as follows:
- Total annual import volume under the tariff quota set at 3.3 MMT, distributed among 54 product categories
- Allocation of tariff rate quotas based on historical data from 2015-2017
- Quarterly allocations with a potential for renewal of 4% over the next administrative quarter (renewal from 1st quarter to 3rd quarter; renewal from 2nd quarter to 4th quarter; renewal from 4th quarter to 1st quarter 2023)
- Imports of steel products with current section 232 exclusions do not count towards the tariff rate quota
- Steel exclusions granted and used in U.S. Fiscal Year 2021 are automatically extended until December 31, 2023 (i.e. no re-application is required)
- Raw aluminum (2 product categories): total annual volume of imports under the TC set at 18 MTT
- Semi-finished (worked) aluminum (14 product categories): total annual import volume under the MOT set at 366 MTT
- Allocation of TRQs based on historical data from 2018-2019, with the exception of aluminum foil where annualized data from 2021 will be used
- Semi-annual allotments not exceeding 60% of the quantity authorized in the first semester
- Must provide a certificate of analysis
Here are some suggestions from the Dentons Cohen & Grigsby (“DCG”) trade group on how to handle the import of steel and aluminum products from the EU under the TRQ:
- Continue to review and consider the submission of Section 232 exclusion and extension requests for steel and aluminum products that are not available in the United States in sufficient quantity or quality on time. timely. If successful, these exclusions and extensions avoid the payment of Section 232 tariffs without having to worry about whether qualifying imports will be seized before the tariff quota is filled. The DCG Trade Group has successfully helped companies obtain such exclusion and extension requests.
- When possible, import eligible products at the start of the quota period to maximize the chances of entering products before the quota is filled (assuming the quotas will be filled). Importers can benefit from the use of bonded warehouses to better manage the customs clearance schedule so that eligible products are withdrawn and entered on the first day of the quota period (i.e. the first day of the shift. (steel) or half (aluminum)).
- Record keeping and compliance will remain at the forefront as the country of origin for steel and aluminum products needs to be justified, as well as the country of “melt and cast” in the case of steel products.