U.S. Reimposes Section 232 Tariffs on Canadian Aluminum and Issues New Marking Rules for Products of Hong Kong

August 2020

On August 6, 2020, the U.S. announced that it will reimpose 10% tariffs under Section 232 of the Trade Expansion Act of 1962 on non-alloyed and unwrought aluminum imports from Canada as of August 16, 2020. The decision came just weeks after the new United States-Canada-Mexico Agreement (USMCA) went into effect. Read the official presidential proclamation for aluminum tariffs
 
The U.S. initially imposed “national security” tariffs of 25% on steel and 10% on aluminum from Canada and other countries in 2018, and then lifted the steel and aluminum tariffs on imports from Canada and Mexico in May 2019 to facilitate the passage of the USMCA. However, under the USMCA, the U.S. reserved the right to reimpose tariffs if “surges” of exports in steel and aluminum to the U.S. were to occur. In a statement on Thursday, the Office of the U.S. Trade Representative (USTR) said Canadian aluminum exports into the U.S. had “surged above historical levels.” In response, Canada’s Deputy Prime Minister said the tariffs were “unwarranted and unacceptable,” and that Canada intended to “swiftly impose dollar-for-dollar countermeasures.”
 
The Aluminum Association, which represents a majority of U.S. and foreign companies in the industry, wrote to USTR to outline its members’ need for a reliable source of raw aluminum last month. The signatories of that letter also pointed out that while Canadian exports of raw aluminum to the U.S. have increased since the tariffs were removed, volumes are at a similar level to 2017, in keeping with the historical trend.
 
The large amount of power required to transform aluminum’s key ingredient (alumina) into refined metal has led most companies to anchor their production of raw aluminum in countries such as Canada, Iceland, or Russia, where energy is abundant. China is also a big producer of energy. The U.S. has long believed that imports of aluminum products originating in these countries, but especially in China, are being transshipped through Canada - and was one of the “unspoken” reasons prompting the reissuance of these tariffs.
 
Affected U.S. companies can request an exclusion from the Section 232 tariffs with the U.S. Department of Commerce.
 
In another significant trade development, products imported from Hong Kong can no longer be marked as such to indicate their origin. Read The Federal Register Notice for Hong Kong. This decision stems from the Executive Order issued on July 14, 2020, which determined that Hong Kong is no longer sufficiently autonomous from China. Products originating from Hong Kong must now be marked as made in “China.”
 
This document notifies the public that, unless excepted from marking, goods produced in Hong Kong, which are entered or withdrawn from warehouse for consumption into the U.S. after September 24, 2020, must be marked to indicate that their origin is “China” for purposes of 19 U.S.C. § 1304 (the marking statute).
 
Customs and Border Patrol confirmed the change in marking requirements does not affect country of origin determinations for purposes of assessing ordinary duties under Chapters 1-97 of the Harmonized Tariff Schedule (HTSUS) or Section 301 tariffs for China. Goods that are products of Hong Kong should continue to report the International Organization for Standardization country code ‘HK’ as the country of origin on the entry documentation.
 
For more information about these and other trade developments, please contact a BDO Customs and International Trade Services professional.
 

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