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Commerce to Investigate Expansion of Section 232 Tariffs on Steel to Include Imports of Electrical Transformer Steel

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Commerce to Investigate Expansion of Section 232 Tariffs on Steel to Include Imports of Electrical Transformer Steel

On Monday May 4, 2020, the Department of Commerce issued a news release announcing the start of a Section 232 investigation on imports of “Laminations and Wound Cores for Incorporation Into Transformers, Electrical Transformers, and Transformer Regulators.” This investigation is effectively an examination of whether or not to expand the current Section 232 tariffs on steel to include these products.

The announcement indicates that imports of the steel incorporated into the specifically identified transformers “are being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.” According to Commerce, it had received “inquiries and requests from multiple members of Congress as well as industry stakeholders,” to start this investigation. Similar to other 232 investigations, the Bureau of Industry and Security will conduct the investigation and request comments in a Federal Register notice that will likely be published soon.

Quoting Commerce’s press release – “transformers are part of the U.S. energy infrastructure,” and “laminations and cores made of grain-oriented electrical steel are critical transformer components. Electrical steel is necessary for power distribution transformers for all types of energy—including solar, nuclear, wind, coal, and natural gas—across the country. An assured domestic supply of these products enables the United States to respond to large power disruptions affecting civilian populations, critical infrastructure, and U.S. defense industrial production capabilities.” It is also important to note that grain-oriented electrical steel (“GOES”) was subject to antidumping duties and countervailing duty orders for several years but there are no current antidumping and countervailing duty orders on GOES.

Based upon the proposed schedule, the secretary of Commerce will notify the secretary of Defense of the investigation, as required by statute. In addition, it stated that the “Department of Commerce will conduct a thorough, fair, and transparent review to determine the effects on the national security from imports of laminations for stacked cores for incorporation into transformers, stacked and wound cores for incorporation into transformers, electrical transformers, and transformer regulators.”

In January 2020, Commerce expanded the scope of the Section 232 tariffs on Steel and Aluminum to include certain other derivative products on products such as nails and thumbtacks without conducting an investigation such as the one now seemingly being proposed. The trade remedies team at Husch Blackwell LLP represents clients now challenging that expansion in the U.S. Court of International Trade. In initiating this new investigation, it appears that Commerce has recognized that it may be on shaky ground for its earlier expansion of section 232 tariffs on steel and aluminum and may be willing to provide a fuller procedure for comments and input from interested parties.

Regardless of the procedures, however, if affected U.S. companies cannot locate the steel they need domestically, and the tariffs make importation of steel to manufacture downstream products, then the only option is to source from other countries. Thus, we expect that numerous companies will file comments on this new round of expansion of national security tariffs.

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Nithya Nagarajan is a Washington-based partner with the law firm Husch Blackwell LLP. She practices in the International Trade & Supply Chain group of the firm’s Technology, Manufacturing & Transportation industry team.

Jeffrey Neeley is a Washington-based partner with the law firm Husch Blackwell LLP. He leads the firm’s International Trade Remedies team.

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Commerce Finds Dumping and Countervailable Subsidization of Imports of Carbon and Alloy Steel Threaded Rod from China and India

On February 10, 2020, the Department of Commerce (“Commerce”) announced its affirmative final determinations in the AD and CVD investigations of imports of carbon and alloy steel threaded rod from China and India. See the fact sheet for a summary of the final cash deposit rates and margins.

In the China AD investigation, Commerce calculated cash deposit rates of 4.26% and 14.16% to the mandatory respondents Zhejiang Junyue Standard Part Co., Ltd. and Ningbo Zhongjiang High Strength Bolts Co., Ltd., respectively. Chinese companies that are eligible for a separate rate received a rate of 11.47%. The antidumping cash deposit rate for all other Chinese companies is 59.45%.

In the China CVD investigation, Commerce calculated and assigned subsidy rates of 66.81% and 31.02% to the mandatory respondents Zhejiang Junyue Standard Part Co., Ltd. and Ningbo Zhongjiang High Strength Bolts Co., Ltd., respectively. The subsidy rate for all other Chinese exporters is 41.17%.

In the India AD investigation, Commerce assigned a cash deposit rate of 28.34% to mandatory respondent Daksh Fasteners and 2.47% for mandatory respondent Mangal Steel Enterprises Limited. The cash deposit rate for all other Indian exporters is 2.47%.

In the India CVD investigation, Commerce assigned a cash deposit rate of 211.72% to mandatory respondent Daksh Fasteners and a rate of 6.07% to mandatory respondent Mangal Steel Enterprises Limited. The cash deposit rate for all other Indian exporters is 6.07%.

The ITC is currently scheduled to make its final determinations on or about March 23, 2020. If the ITC makes affirmative final determinations of material injury to domestic industry, then Commerce will issue AD and CVD orders instructing Customs and Border Protection (“CBP”) to collect deposits based on the applicable duty rate. If the ITC makes negative determinations of injury, then the investigations will be terminated.

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Nithya Nagarajan is a Washington-based partner with the law firm Husch Blackwell LLP. Shee practices in the International Trade & Supply Chain group of the firm’s Technology, Manufacturing & Transportation industry team.

Camron Greer is an assistant trade analyst in Husch Blackwell LLP’s Washington, D.C. office.