US pitches to Japan to end the Trump-era steel and aluminium tariffs, states anonymous sources

The United States made an offer to Japan to address the disagreements over tariffs imposed on Japanese steel and aluminium in 2018 under former President Donald Trump, stating the people familiar with the situation. According to the anonymous sources, the proposal for the same has been submitted by the Commerce Department and office of the US Trade Representatives to the new government officials under Prime Minister Fumio Kishida.

The Department of Commerce refused to comment on the situation as of now, while the United States Trade Representative and the Japanese Embassy in Washington decided to stay mute for comments on the same situation.

The metals spat began in 2018, when Trump placed tariffs on steel and aluminium imports from the European Union, Asia, and other countries, claiming national security concerns. Following this, the EU replied by targeting Harley-Davidson Inc. motorbikes, Levi Strauss & Co. denim, and bourbon whiskey.

The United States and the European Union signed a tariff-busting trade agreement in October, in which Washington will waive the 25 percent tariff on incoming steel imports and the 10 percent tariff on aluminium imports from Europe up to a certain threshold, with anything above that still subject to additional charges. The EU would also delay retaliatory tariffs, thus putting a halt to punitive tariffs on up to $10 billion worth of each other's goods.

According to Trade Representative Katherine Tai, the United States and the European Union have agreed to develop the first-ever carbon-based steel and aluminium trade agreement and establish more incentives for decreasing carbon intensity as part of the settlement.

As per the anonymous sources, the US’s proposal to Japan is similar to the arrangement with the EU, in that a fixed quantity of steel and aluminium will be permitted to enter the US duty-free based on historical averages delivered.

According to Census Bureau statistics, the United States imported around 1.7 million tonnes of steel from Japan in 2017, the most recent year not affected by the tariffs, and 1.9 million tonnes in 2016. Inbound steel shipments from Japan to the United States reached 732,158 tonnes in 2020, revealed the Census data.

While the EU retaliated by imposing duties on the United States, Japan chose a more gentle approach. Because just 5 percent of its steel exports flowed to the United States at the time, Asia's second-largest economy was predicted to suffer relatively little damage. However, additional steel is thought to reach the market via Mexico.

The proposed cease-fire comes as the Biden administration plans to sign a "very powerful" economic framework agreement with Asian nations next year, focusing on areas such as supply chain coordination, export controls, and artificial intelligence standards, according to Commerce Secretary Gina Raimondo.

It's uncertain if the Biden administration's strategy corresponds to the amount of economic commitment demanded by some Asian economies. Japan and others have encouraged Trump to reconsider his decision to withdraw from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was a crucial economic pillar of a strategy to reinforce US-led resistance to China. Raimondo made it clear that rejoining the CPTPP "as is" is not an option.

Imports from the United Kingdom are still subject to steel and aluminium levies. Raimondo and Anne-Marie Trevelyan, the UK Secretary of State for International Trade, met last week to negotiate a solution for early next year.