Steel tariffs: US government opposes WTO ruling
Steel tariffs: US government opposes WTO ruling

12 December 2022 – The US government has rejected the WTO ruling on Section 232 tariffs on steel and aluminium. Will the WTO ruling still have an impact? German Finance Minister warns against subsidy race with the United States. And stainless steel prices continue to rise. Impact of higher raw material costs on alloy surcharges expected for January 2023.

Steel tariffs: US government opposes WTO decision

Initial reactions by the US government to the World Trade Organisation’s (WTO) decision on punitive steel and aluminium tariffs, but also by powerful American steel lobby groups such as the American Iron and Steel Institute (AISI), have already shown shortly after the WTO ruling became known that it is meeting with broad opposition in the United States.

US government clearly backs steel tariffs

“The United States strongly rejects the flawed interpretation and conclusions,” said Adam Hodge, spokesman for the Office of the U.S. Trade Representative. “The United States has held the clear and unequivocal position, for over 70 years, that issues of national security cannot be reviewed in WTO dispute settlement.″

Does this decision have an impact on Section 232 tariffs?

Of course it does! The WTO shows once again that it is a toothless tiger. After all, WTO decisions are not binding. And even if the US government were to appeal against the WTO decision on the Section 232 tariffs, this appeal would come before the WTO’s Appellate Body. And would thus be trapped indefinitely in a blocked body that has not been able to reach a decision for three years.

German Finance Minister warns against excessive subsidies

On the other side of the Atlantic, however, people are trying to warn against excessive subsidies. For example, the German Finance Minister of the current German government, Christian Lindner, FDP. He had warned against an arms race with the United States in the fight for subsidies and demanded that no more public money be put on the table.

No subsidy race with the United States

We support the position of the German Federal Minister of Finance, as subsidy competition never leads to sustainable economic activity, as can be seen from the example of German or European steel producers. Which, by their own admission, have lost their competitiveness in the last decades despite continuous subsidies. And without billions in taxes, EU funding and hidden subsidies, such as in the free ETS certificates, is unable to keep itself alive.

Moreover, this would be further grist to the mill of the Biden administration and the lobby organisations on the us side.

Federal Minister of Economics wants more subsidies?

If necessary, the decision-making on this issue should be put in the hands of the Federal Minister of Finance, because his colleague from the German Ministry of Economics has already shown, albeit in a veiled way, that he would prefer to rely on further subsidies and thus, in our opinion, has shown no competence whatsoever to be able to make a sustainable and future-oriented decision here.

Corruption scandal shakes European Union

Decisions at the European level have to be looked at more closely anyway in view of the current scandal surrounding the Vice-President of the EU Parliament Eva Kaili.

Major raw material prices continue to rise

Looking back at last week, steel scrap and nickel futures made decent gains in the week of 5-9 December. And Chinese spot prices for stainless steel have already risen by more than 2% at the start of the week. This, also in view of the increased molybdenum prices, should definitely have an impact on the upcoming EU alloy surcharges for January 2023.

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