Washington DC, 8 February 2022 (TDI): Last year, the United States granted frugal tariff access to European Union Steal-makers. Now the United States and Japan announced a deal to eliminate the Trump-era tariffs from approximately 1.25 million metric tons of Japanese steel imports annually.

It has been said that a new agreement is going to be done, in which aluminum is excluded. Said agreement would be effective from 1st of April of this year which urges Japan to take “concrete steps” against global excess steel manufacturing capacity, which is primarily concentrated in China.

US-Japan joint statements explicate that Japan will start to implement appropriate domestic measures i.e antidumping, countervailing duty, safeguard measures, and miscellaneous within six months to establish more market-oriented conditions for steel.

Similarly, general reservation has been expressed that the EU Steel & Aluminum deal of October 2021 appeals Japanese steel to be imported duty–free in the US by following a standard “melted and pored” to mitigate the risk of Chinese steel skirting U.S. tariffs.

Japanese Industry Minister Koichi Hagiuda said that this is a beginning toward the settlement, but we will continue to aggressively push the United States to entirely erase the duty in a way compatible with WTO regulations.

According to the ministry, aluminum has been excluded from said agreement not on the request of Japan but said exclusion depicts the US narrative. Albeit, much of the Biden administration’s trade initiatives are focused on reconciling the frayed ties with market-driven democracies among US partners.

US Commerce Secretary namely Gina Raimondo stated that Japan is the most important US ally, said agreement will strengthen the steel industry of America by ensuring its workforce remain competitive.

Unlike the EU and the United Kingdom, which are pursuing a similar agreement, Japan did not apply reciprocal duties on American items such as whiskey, motorbikes, and denim. The agreement comes as steel prices in the United States begin to fall from record highs driven by strong demand and pandemic-driven supply restrictions, which led to high inflation throughout the economy.

U.S. steel industry executives have expressed concern that the Biden administration would negotiate too much access for foreign steelmakers, resulting in a flood of imports as they invested billions of dollars in new capacity.

However, industry executives expressed their comfort that said agreement limited the Japanese imports to about their two-year average from 2018 and 2019, a level that reflects the impact of former President Donald Trump’s 25% “Section 232” national security tariffs.

Contrary to the EU agreement, which included historical tariff exemptions in the bloc’s quotas, Japanese steel imported under previous tariffs will be counted against Japan’s quota quantities.

According to Steel Manufacturers Association President, Philip Bell, around 58 percent of Japan’s 2021 steel imports, or about 550,000 metric tons, came through exclusions, so the agreement will limit incremental volume.

Further, Bell told that overall this is a good bargain for American steelmakers. Japan will also initially decline to engage in US-EU discussions on a global agreement to restrict trade in steel with high carbon emissions, another measure geared at combating China’s carbon-intensive steel output.

However, US officials stated that Japan will consult with the US on methodology for evaluating carbon intensity in steel and aluminum manufacturing.

Japan’s steel sector is likewise highly dependent on coal-fired blast furnaces, whereas more than 70% of the steel in the United States is produced by using electric-arc furnaces, which release less carbon.