On February 7, 2022, the United States and Japan announced an agreement to allow “historically-based sustainable volumes of Japanese steel products to enter the U.S. market without the application of Section 232 tariffs.” Under the agreement, the United States will implement a tariff-rate quota (TRQ) on steel imports from Japan, effective April 1, 2022. Under the TRQ, the aggregate annual import volume is set at 1.25 MMT under 54 product categories (set forth in an annex to the Agreement) and allocated in line with the 2018-2019 historical period. In order to be eligible for duty-free treatment under the TRQ, steel imports must be “melted and poured” in Japan; the agreement also allows that imports of derivative articles of steel from Japan will not be subject to Section 232 duties.
Steel products from Japan within the quota import limits will enter the United States free of any Section 232 duties, while all impacted steel products entering the United States above the quota limits will continue to be subject to the Section 232 25% duty rate. The Department of Commerce will continue the exclusion process for steel products imported from Japan. Beginning in July 2022, the United States will evaluate the utilization and administration of the TRQ on a quarterly basis and will conduct an annual review to calculate the level of U.S. steel demand to either increase or decrease the TRQ volume.
In addition to the TRQ agreement, the United States and Japan released a Joint Statement noting that the countries will:
- Cooperate on trade remedy and customs matters by sharing public information and best practices on topics including how detection of fraud/evasion and circumvention of duties is approached and possible self-initiation of such investigations.
- Monitor steel and aluminum trade between the countries.
- Cooperate on non-market excess capacity in which Japan will implement appropriate domestic measures, such as antidumping, countervailing duty and safeguard measures or other measures of at least equivalent effect. Japan will confer with the United States on such potential domestic measures to address non-market excess capacity and on the current state of global steel and aluminum markets, including market trends and price differences between markets, domestic industry conditions, and analysis of import and export data.
- Annually review this arrangement and ongoing cooperation, including any changes in the global steel and aluminum markets, U.S. demand and imports.
In a brief press statement, U.S. Trade Representative Katherine Tai stated, “This agreement, combined with last year’s resolution with the European Union, will help us work together with Japan to combat China’s anti-competitive, non-market trade actions in the steel sector, while helping us reach President Biden’s ambitious global climate agenda.”