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Trade

US waived extra tariffs on 70% of Japanese steel and aluminum

Trump's protectionism leaves manufacturers short of high-quality inputs

A Nippon Steel steel mill in Chiba, Japan: The effect of extra tariffs on Japanese steel and aluminum producers was less severe than feared, the trade ministry found. (Photo courtesy of Nippon Steel)

TOKYO -- Washington waived additional tariffs on 78% of Japanese steel and aluminum imports in May and on 64% of such imports in June, Nikkei has learned, as the hollowing out of U.S. manufacturing continues.

U.S manufacturers have struggled to turn out sufficient quantities of high-performance steel and aluminum for auto production, which manufacturers have long relied on Japan for. President Donald Trump's aggressive effort to protect U.S. steel and aluminum producers has had unintended consequences.

Washington enacted the new import duties in March 2018, announcing additional tariffs of 25% on Japanese steel and 10% on aluminum. At the time, there were concerns in Japan about the effect on exporters, but an analysis in May and June by Japan's Ministry of Economy, Trade and Industry found that the duties were waived for the majority of these materials.

Washington has indicated that it will not apply the duties to products that are difficult to find U.S. substitutes for, even if those products are subject to additional tariffs. The government considers requests for exemption if a U.S. automaker or trading company, for example, requires Japanese materials.

Authorization for tariff exemptions must be renewed annually. As of June, 63% of Japanese steel imports and 76% of its aluminum imports were exempted.

The U.S. also waived the extra duties on imports from other countries, but the overall share was 42%, highlighting Japan's competitiveness in steel. Fifty-two percent of German steel escaped the extra tariffs, while the figure from China was 43%.

In 2019, Japan exported 1.28 million tons of steel to the U.S., about 4% of its total export volume. Japan's shipments of steel to the U.S. fell by about 30% last year, versus 2017, amid a bruising trade war between U.S and China.

In the fiscal year ended March 2020, major Japanese steelmakers, including Nippon Steel and JFE Steel, posted huge losses due to stiffer competition with Chinese producers. Although the U.S. import duty waivers demonstrate Japan's technological prowess, prospects for the country's steel industry remain bleak.

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