The U.S. and Japan reached a
truce that will allow most steel shipments from the Asian nation to enter
tariff-free for the first time since 2018 and sees the countries working
together to combat Chinese trade practices that harm the industry.
Washington will suspend the 25%
levy on incoming steel imports from Japan up to 1.25 million metric tons a
year, officials from the Commerce Department and U.S. Trade Representative’s
office told reporters Monday. Anything beyond that will still be subject to
additional charges. The agreement will take effect April 1, the officials said.
The U.S. imported about 1.7
million metric tons of steel from Japan in 2017, the most recent year not
affected by the tariffs. Imports fell to 1.1 million tons by 2019, according to
Commerce Department data.
The solution, which Bloomberg
News reported earlier, mirrors the accord that the U.S. reached
with the European Union in October that ended punitive measures on as much as
$10 billion of each other’s goods.
“Today’s announcement builds on
the deal we struck with the EU and will further help us rebuild relationships
with our allies around the world as we work to fight against China’s unfair
trade practices,” Commerce Secretary Gina Raimondo said in a statement.
Japan’s Trade Minister Koichi
Hagiuda told reporters in Tokyo on Tuesday that the move was a step forward,
but added: “We will continue to press the U.S. hard for a complete resolution.”
While the U.S. and EU are seeking
to leverage their deal into a broader global arrangement to address non-market
excess capacity and penalize countries that don’t meet low-carbon targets for
steel and aluminum, Japan isn’t joining that process at this time, the
The U.S. and Japan instead will
confer on potential domestic steps that the Asian nation can take, including
methodologies for calculating steel and aluminum carbon-intensity, the
officials said. Japan wanted to focus the negotiations on steel, and thus the
nation’s aluminum exports aren’t covered by Monday’s deal and will still face
10% tariffs, they said.
The metals dispute started in
2018, when Trump imposed duties on steel and aluminum from its biggest trading
partners, including the EU and Japan, citing risks to national security. While
the EU subsequently retaliated, targeting products including Harley-Davidson
Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey, Japan did
not, focusing instead on negotiating a trade deal with the U.S. to cover some
agricultural and industrial products.
U.S. Ambassador Rahm Emanuel said
the agreement was spurred on by President Joe Biden’s virtual summit with
Japanese Prime Minister Fumio Kishida last month, at which Biden pressed for
urgency on the problem.
“As opposed to the last three
years, this is a step forward in an affirmative way, together,” Emanuel said in
a phone interview from Tokyo. “The U.S. is now turning its attention to another
ally, Great Britain,” he added. “When we collectively stand up, that is a big,
The metals tariffs on Japan
remained when the Biden administration took office last year, and the U.S. made
an offer to Japan to resolve the steel dispute in December, an official with
knowledge of the talks said at the time. But Tokyo was holding out for a better
deal and had wanted the tariffs to be abolished completely, the person said.
In terms of volume, Japan only
accounts for about 4% of all steel imported to the U.S., and about 1% of all
metal consumed in the U.S., based on Commerce Department data.
Still, it’s another domino
falling for allied countries receiving exemptions to send steel duty-free to
the U.S. market. That access makes domestic steel producers uneasy, because
they argue it creates a slippery slope that opens the door for those countries
with exemptions to ramp up their exports.
U.S. steelmakers also warn that
exempted nations can act as pass-through points for metal coming from bad
actors like China. They worry that Europe, which recently received an
exemption, and Japan could unknowingly import metal from restricted countries
and then export that to the U.S., flooding the market.
All steel from Japan that will be
subject to duty-free entry will need to be melted and poured in the nation, the
U.S. officials said, a measure meant to block imports from other nations using
Japan as merely a point of transit.
United Steelworkers, which
represents 850,000 employees in industries including metals and mining, said
the deal shows Biden “understands that we must move beyond the less-effective,
one-size-fits-all approach of the previous administration.”
It added that the
melted-and-poured requirement “will ensure that steel imports from Japan are
actually produced there, which will help stem circumvention and allow workers
in both countries an opportunity to succeed.”
After reaching the EU deal in
October, the Biden administration has turned its attention to negotiating steel
deals like the one announced on Monday with additional allies. The U.S. and
U.K. last month started talks to address tariffs on both steel and
aluminum and the problem of global overcapacity.