U.S. Steel Imports Tariff on Turkish Steel

Before COVID-19’s impact, international trade relations have been a key issue in the steel sector for the past two years since U.S. Section 232 steel imports tariffs emerged. On 1st of March 2018, the initial announcement of tariff on steel and aluminum started a tit for tat among trade partners, changing the balance of steel exports to U.S. Following the events, in August 2018, the United States doubled its steel tariffs on Turkish steel imports to 50%, prompting legal challenges by Transpacific Steel to the decision, which was reversed back to 25% in May 2019.

In 2017, U.S. was one of the major destinations of Turkish exporters, accounting for 15% of all Turkish steel exports. According to the local steel association, this number is down to 3% today, pointing out to a major shift in volume of Turkish steel exports to U.S. in recent years. Currently, Canada, Mexico, South Korea, Australia, Brazil, and Argentina are exempted from U.S. steel tariffs.

On 14th of July, United States Court of International Trade concluded that the doubled tariff rate on Turkish steel imports was unconstitutional, and lacked a nexus to national security. Section 232 involves several steps and investigations focusing on national security impacts of imports. Court’s report focused on collective impact of global steel imports on U.S. national security, and not the impact of steel imports from Turkey individually.

While Section 232 does not prevent the government from focusing on particular exporters, the decision to increase tariffs on imported steel products from Turkey, and Turkey alone was found “arbitrary and irrational” according to court’s ruling.

Turkish Steel Exporters’ Association responded to court’s ruling by announcing their plans to seek legal ways to make up for the losses due to doubled U.S. tariffs on steel. Borusan Mannesmann recently announced it has been granted entitlement to $14 million from the U.S. customs authority for the lawsuit filed against Section 232 tariffs.

In the recent months, Turkish steel market faced several challenges stemmed from both coronavirus pandemic, and EU’s recently approved safeguard measures reducing Turkish hot rolled coils’ quota down to 345,000 tons per quarter. As latest events pushed Turkish steel exporters to search for new markets, reduction of U.S. steel tariff and EU’s latest safeguard measures may potentially pave the way for rebalancing Turkish steel exports to United States.