Background

Following the publication by USTR (United States Trade Representative) of the 2018 version of the annual report on international trade barriers around the world on March 30th, a succession of threatened trade import tariffs was issued, in line with President Trump’s 2018 Trade Policy Agenda.

This report highlighted that there were trade barriers in markets such as China, the European Union, Indonesia, Russia and Japan. The annual report is required under section 303 of the Trade and Tariff Act of 1984, which requires USTR to highlight the effect of trade barriers on U.S. Exports. This year’s report highlights 64 markets globally that have barriers to U.S.

Actions taken

U.S.A. issued two separate intended actions to ensure a fairer trade between U.S.A. and other countries. This took the form of two separate actions:

  • Section 232. This action is a global action covering Steel and Aluminium products. U.S. is to impose 25% import duty on Steel products, and 10% on Aluminium products. This action is taken particularly to protect U.S. security and defence industry.
  • Section 301. This action is specifically to balance Intellectual Property (IP) theft by China on U.S. product design theft over many years. This is ONLY between USA and China, and any US subsidiary companies elsewhere in the world.

Section 232

This global import duty covers many items, all identified by their HS codes. These include items that affect ESA members. The key HS codes are:

  • 8484 1000. Semi metallic gaskets. (Spiral Wound Gaskets, Kammprofiles, Corrugated gaskets, heat exchanger gaskets etc.)
  • 8484 2000. Mechanical seals of all types.
  • 8484 9000. Envelope gaskets.
  • 4009 4200. Semi metallic Expansion Joints.
  • 8481 4000. Polymeric seals with metallic reinforcement.

In 2017 E.U. exports to U.S.A. of Steel products on the list were worth 5.3 billion Euros, and 1.1 billion Euros worth of Aluminium products.

There were limited discussions between Cecilia Malmstrom (E.U. Trade Commissioner) and U.S Commerce Secretary, Wilbur Ross, which reached impasse. As a result trade import duties were imposed by U.S on 20th June, and E.U. retaliatory duties were imposed on a list of identified goods worth $3.34 billion on 25% tariff, and a further $4.2 billion on tariffs ranging from 10% to 50%. The highest profile of which was Harley Davidson motor cycles.

It should be noted that Canada and Mexico (NAFTA partners) are also on the list of countries affected, despite new NAFTA agreement being under current review.

Section 301

Here U.S. has imposed $34 billion worth of tariffs on 818 of China goods, which came into effect on 20th June, with a further $16 billion worth of tariffs on a further 284 items, which will become effective sometime after 30th August. The products listed will be subject to 25% import duty into USA.

The threat of a further $200 billion worth of tariffs on 6,031 of Chinese goods which will be subject to 10% import duty has been formalised into a new list published 11th July. This list includes many materials and products:

  • 3926.90.45- Gaskets, washers which we use for FFKM and FKM elastomeric seals;
  • 4016.93.10 Gaskets and washers in non-vulcanised rubber which we use for general rubber seals;
  • 6806.90.00 Vermiculite sheet;
  • 6815.10.00 Graphite rings used in valve stems.

From US manufacturers point of view, there are many raw materials, like natural Graphite, Gypsum, Mica, Steatite, Fluorspar, Vermiculite and natural Rubbers (SBR) that are used in sheeting products, Packings and Elastomeric seals, and chemicals like Toluene, Phenol, and Benzene used in manufacturing process.

G7 meeting in Canada in June

There was some hope that the G7 meeting held in Canada at the end of June would lead to a last minute agreement not to impose the import duties. However the meeting was somewhat acrimonious, and with Donald Trump leaving early for his historic meeting with the North Korean leader in Singapore, with no agreement reached.

Future

Currently there seems to be no movement to change the situation, but we will be keeping a close eye on the position and will report back to members if we hear of a change in the current position.