On February 27, 2020, President Donald Trump issued a Presidential Memorandum declining to impose Section 232 tariffs on imports of titanium sponge. While concurring with the findings of the Department of Commerce’s Section 232 report that imports of titanium sponge threaten to impair national security, the president declined to take action in the form of Section 232 tariffs at this time.  Instead, Trump issued a directive for the secretaries of Commerce and Defense, with other executive branch officials, to form a working group to address national security concerns.

This Section 232 investigation under the Trade Expansion Act was initiated in March 2019 (see Trump and Trade Update of March 5, 2019) as a result of a petition filed by Titanium Metals Corporation alleging that the quantity or circumstances of U.S. titanium sponge imports threaten national security. On November 19, 2019, Secretary of Commerce Wilbur Ross submitted a report to the president finding that imports of titanium sponge, accounting for 68 percent of all titanium sponge consumed in the United States in 2018, did threaten to impair the national security by placing the U.S. titanium sponge producer’s operation under severe financial stress. The secretary found that “low-priced titanium sponge imports, as well as low-priced titanium scrap imports, depress the price of U.S. titanium sponge and discourage recapitalization and modernization of the remaining active producer’s aging production facility.” The report also found that if the remaining U.S. facility ceased operation, the United States would have “no active domestic capacity to produce titanium sponge for national defense and critical infrastructure needs.” Over 94 percent of titanium sponge imports in 2018 were from Japan. Nevertheless, Ross recommended that no action be taken at this time to adjust imports under Section 232.

The working group has been directed to invite Japanese officials to participate in discussions in order to agree upon measures “to ensure access to titanium sponge in the United States for use for national defense and critical industries in an emergency.” In addition, the Secretary of Defense has been tasked with seeking new appropriations to increase access to titanium sponge for national defense and critical industries and to support domestic production capacity for the production of titanium sponge to meet national defense requirements.