Japan, USA to begin trade talks soon on Article 232

The United States Secretary of Commerce and the United States Trade Representative (USTR) will visit Japan next week to discuss the issue of Article 232 of the US Trade Expansion Act, which targets steel and aluminum imports, according to latest reports by Japan Metals Daily.

Koichi Hagiuda, Minister of Economy, Trade and Industry, Japan, in his telephonic conversation with the officials last week called for steady resolution of the Article 232 issue.

If the talks take place next week, exports to the USA, which have been sluggish since the invocation of Article 232, may recover. The Japanese steel industry is closely watching the Japan-US trade talks, and the industry expects progress on the matter.

Japan's steel exports plunge

Japan's steel exports to the USA have declined significantly since 2018 when Article 232 was invoked. In terms of volumes, Japan exported 1.73 million tonnes (mn t) in CY'17. However, exports fell drastically by 60% in 2020.

On the other hand, aluminum product exports from Japan to the USA stood at 35,000 t in 2017, which fell to 21,000 t in 2020. The additional tariffs imposed by the USA (25% on steel, 10% on aluminum) as part of Article 232 have had a major impact for sure.

If the importer's application is approved, the application will be exempted, according to Article 232. As of 2019, about 70% of the applications were allowed to be excluded from steel. The remaining 30% was not allowed to be excluded due to opposition from domestic local companies.

In some cases, US steel users import Japanese steel products with the knowledge that tariffs will be levied. If Japan is excluded from the scope of Article 232, then it is highly likely that US end-users will stand to benefit.Japan, USA to begin trade talks soon on Article 232.