The U.S. and Japan have reached an agreement to institute a tariff-rate quota (TRQ) system to exempt imports of Japanese steel from 25% Section 232 duties beginning April 1, 2022. Although the agreement will be subject to a later Presidential Proclamation with additional details, the Department of Commerce announcement provides the following:
- The steel must be “melted and poured” in Japan to be eligible for in-quota treatment without Section 232 duties.
- The TRQs are “first-come, first-served,” and once a TRQ is filled, the 25% over-quota duties apply.
- Japanese steel is covered by 54 TRQ product categories.
- TRQ product category quantities are administered on a quarterly basis, calculated based on 2018-2019 historical imports.
- The Section 232 product exclusion process remains for Japanese steel. Approved product exclusions exempt Japanese steel from Section 232 duties, and importers may still seek additional Japanese steel product exclusions.
- Japanese derivative articles of steel will not be subject to 25% Section 232 duties.
In a U.S.-Japan Joint Statement, both governments agree to expand coordination on trade remedies and customs matters, including monitoring and sharing steel and aluminum import data. Japan will initiate domestic measures to establish more market-oriented conditions for steel, such as antidumping and countervailing duties and safeguard measures, by July 2022. The U.S. and Japan will confer on global steel and aluminum arrangements to address both global non-market excess capacity as well as the carbon intensity of the steel and aluminum industries, including conferring on methodologies for calculating steel and aluminum carbon-intensity and sharing steel and aluminum emissions data.
Questions remain on a variety of subjects. Note that no TRQ system has been announced for Japanese aluminum. Also, no guidance has been provided yet for Japanese steel in foreign-trade zone (FTZ) Privileged Foreign (PF) status before April 1, 2022 and entered thereafter or Japanese steel admitted into FTZs on or after April 1, 2022.