Thank you to all the US members who contributed to the MMTA consultation on the Office of US Trade Representative’s (USTR) consultation on Section 301 tariffs that included proposed 25% tariffs on several critical mineral and metal
imports from China, including indium, chromium, tantalum and tungstates. In the June issue we shared with you
the MMTA’s response to the USTR consultation.
The waiting game
The MMTA’s response ended up being one of more than 1,100 received by the USTR. The sheer volume of responses to read through and weigh up has been enough to delay the implementation of the new tariffs beyond the initial target
date of 1st August. As this Crucible issue went to press, a determination was due at the end of August, but not yet published. There is talk that, with the US presidential election campaign now in full swing, any final decision might be
left until after the November election, for the incoming new US administration to tackle.
The balancing act
In the election run-up, any decision by the current US administration of President Biden, who has given way to his vice president Kamala Harris as the Democratic candidate, may be fraught with political pitfalls. Heed warnings about making
life harder for US manufacturers before a domestic supply chain can plug a potential gap in imports, backtrack on the tariff proposals, and your political opponent might argue that you are not protecting the US industry hard enough. Go hardline on tariffs and look “tough on China” (and hear China say that the US “has lost its mind”), and risk hiking costs for some
of the domestic industries you are aiming to protect. Meanwhile the owner of Tesla, the EV manufacturer chiefly protected
by the 100% tariffs on EVs mooted just as its sales dived and Chinese vehicles gained global market share, has come out in support of the Republican candidate. Can you walk a fine line in between? Or do you decide that this will keep, let the election play out, and let the new administration make that call, free from campaign-time political traps?
The Good Intentions Paving Co
US politics aside, with the best intentions of protection come unintended consequences. With any trade barrier argument,
there are typically two sides, upstream and downstream/OEMs, one of which is looking for protection against an overseas
competitor, the other for security of supply. Running rings around both are importers determined to dodge tariffs.
A couple of factors might have upset this usually tidy game setup. One is that China has stepped up its own protectionist
measures and has realised the power of its hand as the dominant supply-side player. While bringing in an export licensing regime for materials strategic to industries such as high-tech electronics and electrolysis, including battery technologies
(e.g. gallium, germanium, graphite) may be largely symbolic, it is enough of a shot across the bows to get those in the US
reliant on Chinese materials worried. Another is the sheer scale and scope of the proposed Section 301 tariffs, from
25% levelled on imports including the critical minerals as mentioned and rare earths magnets, to doubling of tariffs to
50% for solar cells and semiconductors, to quadrupling them to 100% for Chinese-made electric vehicles. The high level of
protection offered to downstream manufacturers has to be weighed against the needs of their supply chain.
The 1,100+ responses have varied, from calling for wider and tougher measures, to closing exemption loopholes, to widening exemptions, to a stay of execution, to warning against tariffs and calls for alternative support.
The American Automotive Policy Council, speaking for Ford, General Motors and Stellantis, in its response
recognises the US administration’s “difficult balancing act” and calls for measures on natural and synthetic graphite to be aligned, ending the temporary exemption for the latter. But it also calls for the new tariffs on both forms of graphite to come into effect simultaneously, a year later than proposed, in 2027, buying the US EV battery supply chain time. It also argues against a 25% tariff on permanent (rare earth) magnets, and instead calls on the US to follow the recommendations made by the US Department of Commerce (from when it had rejected Section 232 tariffs) “aimed at fostering a domestic
supply chain for rare earth magnets led by the U.S. and its allies, while also reducing our dependence on foreign
sources for these magnets and the rare earths they require.”
Meanwhile the Refractory Metals Association, which represents North American manufacturers of tungsten products, including carbides, welcomes 25% tariffs on the whole range of tungsten concentrates and tungstates imports, reasoning that this would “encourage more tungsten mining in the US and Canada and will further enhance tungsten raw material independence in North America through strengthening US tungsten refining and tungsten chemical capabilities, as well as tungsten powder production, and will greatly support downstream sectors such as defense, semiconductor, and the general wear markets.” And it asks for the duty to be extended to other tariff subheadings: 8101.99.10, 8101.99.80, and 8101.94.00
(downstream sintered and/or wrought tungsten/tungsten alloy products) to stop Chinese exporters declaring
taxed products under these codes to bypass the new tariffs.
The Aluminum Association and the American Iron and Steel Institute also call for tariffs to be expanded, to avoid circumvention, to aluminium and steel products from third party countries made with Chinese aluminium or Chinese ]raw steel. Else they expect to end up playing whac-a-mole.
The Tantalum Niobium International Study Center (TIC), like the MMTA an international association, treads lightly (as
well one might, given the minefield).
Even the good intentions of tariffs, which are ultimately focused on protecting domestic producers, create concerns when the intention of leveling the playing field is subjugated by the ability of certain players to use the situation to their advantage, the TIC warns.
“Tariffs inevitably raise prices somewhere in the supply chain, as it is a certainty that one “man’s” liability becomes another’s benefit where trade barriers are concerned. This is especially true for an industry that is 100% dependent on overseas’ sources for their critical raw materials,” the TIC explains.
By contrast, responding on its own behalf, Global Advanced Metals, major US based tantalum manufacturer that benefits from a vertically integrated supply chain built on ownership of tantalum concentrate coming out of lithium-tantalum mines in Australia, supports the 25% tariffs on unwrought tantalum (tariff code 8103.2000).
If anything, GAM argues that the 25% tariff would counter-balance China’s own existing import tariffs of 25% on tantalum powders, waste, and scrap, and 20% on unwrought tantalum. These, GAM argues, have given China a market advantage as it established itself as a leading producer, cutting into the US market share — while. by contrast, US either has none or very low (2.5%) tariffs on these tantalum products.
Like the US tungsten producers, GAM also calls for the scope of the tariff on tantalum to be widened to pre-empt Chinese origin imports simply switching to a different customs code to circumvent it.
“GAM encourages USTR to consider increasing tariffs on all primary tantalum products, including powders, waste and scrap, wire, and ore and concentrates (HTS Codes 8103.20.11, 8103.20.19, 8103.30.00, 8103.90.11, 8103.90.19, 8103.90.90, 2615.90.00. Establishing a uniform tariff across all tantalum products will eliminate avenues to evade tariffs that, we believe, are currently being significantly exploited. CBP has increased enforcement efforts, but establishment of a uniform standard would assist U.S. manufacturers in withstanding misclassified foreign imports while simplifying
tasks for U.S inspectors and importers,” GAM responds.
So here we are, waiting to see if the US government, present or future, can find a pathway to implement all its good
intentions, without paving the road to hell, as the saying goes.
Antimony at arms
August turned out to be a month for waiting long waits. Exactly mid-month, on 15th August, China’s Ministry of Commerce (MOFCOM) announced, without giving away any practical details, that it will be imposing restrictions on exports of antimony. The decision was taken, MOFCOM said, “in order to safeguard national security and interests, and fulfil international obligations such as non-proliferation”.
Read into that post-Cold War-sounding term exactly what it sounds like. Antimony’s applications, fire retardants beside, include a wealth of military gear, including, non-exhaustively, armour-piercing ammunition, infra-red technologies from night vision goggles to guided missiles, nuclear weapons, and auxiliary equipment such as batteries — lead acid ones still used by most armoured vehicles, despite lithium-ion starting to make inroads, and solar power cells for portable charging.
We could speculate on what prompted the decision as armed conflicts widen geopolitical rifts. Whether China is wary of having the antimony it produces and exports used in ammunition against itself, or against its ally Russia, as the latter’s war in Ukraine spills into its own territory; or against any other country in its sphere of influence; whether it just wants to
prevent global arms proliferation; or to divert its natural resources to focus on manufacturing its own armaments, rather
than a rod for its own back, this isn’t new. Coming on the back of China’s export licencing regime introduced since this time last year for other materials strategic to defence and security e.g. gallium, germanium, graphite — in trade terms, we are looking at another trade barrier.
The new measures are due to come into force on 15 September, a month after MOFCOM’s announcement. But with few details, in the last week of August, the Chinese industry is none the wiser. The guess is that the new control measures are, again, export licences restricted to non-military end-use, in which case, if the experience a year ago is anything to go
by, their introduction can disrupt exports initially for 6-8 weeks as exporters apply and wait for them. While they wait for the big reveal, there is a rush to get antimony out of China before, whatever the measures are, they come into force.
The wait is adding more volatility to the volatile year for the antimony market. You can revisit the June issue of the Crucible
for the detailed summary of what has been happening to antimony prices and why, by our member Fastmarkets,
which has been benchmark pricing antimony since the 1980s.
At the time of its report, spot prices had almost doubled since April to a level not seen since its antimony pricing began. After MOFCOM’s announcement, they reached double their 2023 average. Even without export restrictions — and why
prices had risen — more antimony had been staying in China.
EU antimony trioxide producer Campine doesn’t mind. “We have reduced our antimony metal sourcing from China to below 5% and we are partly supplied internally through our antimony recycling,” stays Hans Vercammen, director of Campine’s Specialty Chemicals division. US dependence on China is also falling.
Come September, watch this space.
