Tariffs imposed under section 232 on imports of steel and aluminum worked, reducing imports and increasing U.S. production and prices, the U.S. International Trade Commission reports.
The report finds that on average from 2018 to 2021:
U.S. importers bore nearly the full cost of these tariffs because import prices increased at the same rate as the tariffs. The USITC estimated that prices increased by about 1% for each 1% increase in the tariffs under sections 232 and 301.
Brian Crawford, Beer Institute President, said the report shows U.S. companies – not Chinese ones – bore the brunt of costs imposed by section 232 on aluminum.
Section 232 tariffs reduced imports of affected steel products by 24%, increased the price of steel products in the United States by 2.4%, and increased U.S. production of steel products by 1.9%. U.S. production of steel was $1.3 billion higher in 2021 due to section 232 tariffs.
Section 232 tariffs reduced imports of affected aluminum products by 31%, increased the price of aluminum products in the United States by 1.6%, and increased U.S. production of aluminum products by 3.6%. U.S. production of aluminum was $0.9 billion higher in 2021 due to section 232 tariffs.
Section 232 increased domestic sourcing, and reduced production in downstream industries in the U.S. that use steel and aluminum products as inputs because of increased prices, although the magnitude of those effects varied across industries. Section 232 tariffs increased prices in downstream industries 0.2% on average, and decreased production in downstream industries 0.6% on average. U.S. production in downstream industries was $3.5 billion less in 2021 due to section 232 tariffs.
Across all affected sectors, section 301 tariffs reduced imports from China by 13%, increased the value of U.S. production by 0.4%, and increased the price of U.S. products by 0.2%.
In specific sectors, effects of section 301 tariffs varied. For example, section 301 duties reduced imports of computer equipment by 5%, increased the price of computer equipment in the U.S. by 0.8%, and increased the value of U.S. production of computer equipment by 1.2%. The section 301 tariffs reduced imports of semiconductors by 72.3%, increased the price of semiconductors in the U.S. by 4.1%, and increased the value of U.S. production of semiconductors by 6.4%.
Consistent with the explanatory statement’s direction to estimate effects in industries directly and most affected, the report estimates the effects of 232 tariffs on the U.S. steel and aluminum industries and downstream industries that intensively consume steel and aluminum and the effects of section 301 tariffs on industries in the U.S. that produce the products subject to 301 tariffs.
The tariffs were imposed by former president Donald Trump.
Beer Institute: Tariffs Hurt U.S. Firms, Not Those in China
U.S. companies, rather than China, bore the brunt of costs imposed by Section 232 tariffs on aluminum.
"Today's ITC report confirms what brewers have known since March of 2018: Section 232 tariffs on aluminum punish American job creators by increasing production costs, which ultimately trickle down to higher prices for consumers," said Brian Crawford, president and CEO of the Beer Institute. "These tariffs have cost the American beverage industry more than $1.7 billion since their enactment and have failed to create the significant number of jobs that were promised. We hope this report will discourage new tariffs on domestic manufacturers and encourage the Biden Administration to repeal Section 232 tariffs on aluminum and deliver relief for job creators and consumers."
This report by the ITC comes on the heels of the World Trade Organization’s (WTO) ruling in December of 2022 that by invoking national security concerns when imposing Section 232 tariffs on aluminum, global trade rules were violated, Beer Institute noted.
The Beer Institute and its counterpart associations in the American beverage industry have been vocal about the damage Section 232 tariffs have done to American brewers and beverage companies. Earlier this month, Beer Institute President and CEO Brian Crawford penned an opinion piece in Bloomberg Tax detailing the harmful effects of aluminum tariffs on the beer industry. In July of last year, the CEOs of America’s biggest brewers sent a letter to President Biden urging him to lift Section 232 tariffs on aluminum.