Chinese And Japanese Steel Imports Receive More U.S. Tariff Exclusions Than Canada

Steel factory
A worker observes an electric furnace inside a steel factory on the outskirts of Jammu February 12, 2018. (Photo: REUTERS/Mukesh Gupta/File photo)

As China and the U.S. draw closer to the end of their tariff truce on March 2, the United States handed out 40 percent of tariff exclusions on Chinese steel imports. Analysts noted that the figures are strangely larger than tariff exclusions on Canadian imports.

According to CBC Canada, only 2 percent of steel imports from Canada were excluded from U.S. tariffs to date. The data came after Chinese and U.S. delegations wrapped up the second round of trade talks.

Furthermore, it was revealed that 86 percent of aluminum imports are now allowed to enter American markets without tariffs. Canada, on the other hand, is only allotted with 1 percent in aluminum import exclusions.

Aside from China, Japan is also receiving a lot of success with its steel import. 62 percent of the Asian country's imports are excluded from U.S. tariffs. Part of the exclusions is on specialty metals.

When a company applies for tariff exclusion, there is a long process to undergo before the final decision based on particular criteria is made. One of the criterions is product availability in the United States.

Last year, the American Department of Commerce approved numerous exclusion requests. Poland is among the countries that saw an increase in tariff exclusions in 2018. Data revealed that Polish steel received over nine times in exclusions compared to 2017's records.

So far, 64 percent of exclusion applications for Canadian steel are pending while 8 percent have been denied. These figures have led some economists to question why Canada isn't among the countries that have received significant tariff exclusions.

Meanwhile, India could experience a similar scenario. Sources close to the matter recently revealed that the U.S. government is reportedly planning to withdraw its previous zero-tariff exclusion arrangement with the South Asian country.

According to a Reuters report, if U.S. President Donald Trump's administration decides to remove the zero-tariff exclusion on an estimated $5.6 billion of Indian exports, it would be the most significant action that the American government will take against India since Trump took office.

India has been a Generalized System of Preferences (GSP) beneficiary since the 1970s. However, the U.S. Trade Representative (USTR) had been discussing the country's beneficiary status.

"(The two sides) were trying to sort out the trade package, but were not able to actually finish the deal. In the meantime, these other things, data localization, and e-commerce have come along. In a sense it's like someone has rained on the parade," a source said.

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