Proposed Modifications to the Section 301 Actions
(Docket Number USTR-2024-0007)
In June the US Trade Representative consulted on proposed additions to the USTR’s Section 301’s 25% import duties, including HTS codes for certain Chinese materials covering some forms of Cr metal, Ta metal, In metal, W concentrates, W carbide, and other materials relevant to MMTA membership starting August 1st 2024 – see the full list of included materials here . The request for comments closed on 28th June 2024. The MMTA as an association cannot take a position, but it has made a submission outlining the range of views expressed by its US members. We thank all US members who contributed their views in confidence to the MMTA Executive, and publish here the response submitted by the MMTA’s North America committee, taking the anonymised member feedback into account.
To: Ambassador Katherine Tai, United States Trade Representative Juan Millan, Acting General Counsel Office of the United States Trade Representative 600 17th Street NW Washington, DC 20508
Re: Request for Comments: Proposed Modifications to the Section 301 Actions (Docket Number USTR-2024-0007)
AGENCY: Office of the United States Trade Representative (USTR)
ACTION: Request for industry comments
Dear Ambassador Tai and Mr. Millan,
The Minor Metals Trade Association (MMTA) is a non-profit international trade association established in 1973 and consisting of over 140 companies involved in the global critical minerals industry, with 20% of its membership made up of US companies.
In response to your request for industry comments on the proposed modifications to the Section 301 actions, the MMTA surveyed its US members to understand their views and has collated the comments from those who wish to express their perspectives.
Responding members repeatedly expressed concern that 25% tariffs on critical raw materials for US industry specifically including Aluminothermic Chrome metal, Tantalum metal, and Indium metal would negatively impact crucial US industries and key manufacturing and export sectors by raising costs on raw materials for which there is no domestic supply, and harming US competitiveness versus both Western and other non-Western competitors for industries whose robust health is essential for US national resilience.
Chrome metal (HTS 8112.21.00) and Tantalum metal (HTS 8103.20.00) as raw materials for the US superalloy, aerospace, and energy industries, as well as Indium metal (HTS 8112.92.30) for artificial intelligence processors, electronics, aerospace, and energy, are included in the current proposed additions to the Section 301 Chinese origin tariffs for August 1, 2024 implementation.
Members advised that the limited Western Chrome metal producers are already stretched replacing Russian production for Western markets, with Russian material out of the market for the indefinite future. Aside from Chinese and Russian origins, the only commercial primary Chrome metal productions available for the US aerospace and energy industries are one UK producer and one French producer. They both have been replacing Russian material for the past two years and meeting European demand, and they cannot replace Chinese material for US consumption.
A member noted that even with blueprints in hand and permitting requirements and timeframe aside, a US Chrome metal plant would take at least 12 months to construct, there are only domestic precursors for 1/5 of domestic demand, and qualifications for aerospace applications take time and are complex. Currently oncoming US Chrome metal production is only for niche grade material for specific smaller applications, and would draw feedstock away from the available supply of Western Chrome metal for US superalloys for aerospace and energy.
For Tantalum metal, the point was made that Chinese materials total of 44% of US imports consumption ytd roughly equaled the combined totals of the next four origins together (USITC), and could not be replaced in the near term.
Members noted that with no primary domestic commercial Chrome metal, Tantalum metal, nor Indium production, the US is almost completely dependent on imports for domestic consumption of these critical metals (USGS).
The point was raised that China produced 64% of primary US Chrome metal (HTS 8112.21.00) imports for consumption ytd, and 44% for Tantalum metal (HTS 8103.20.00) ytd (USITC, USGS). These are used to make superalloys for critical parts of jet aircraft engines as well as for energy and medical applications.
Members advised for both Chrome and Tantalum metals, these 25% tariffs would amount to a raw material tax on US superalloys, aerospace, and energy industries starting August 1, 2024. These critical metals would not even be eligible for the proposed exclusion mechanism, which in turn would not even be set up until sometime in 2025.
A member expressed the view that a 25% duty on Indium metal would adversely affect the competitiveness of US industries using it as a raw material for essential electronics, aerospace, energy, telecommunications, display, and detector applications, hurting US companies and harming employment.
Members cautioned that these tariffs on Chrome, Tantalum, and Indium metals would affect US industry by raising costs, and would hamper US competitiveness in key global export markets without negatively impacting China. Aerospace, en-ergy, and electronics are critical US manufacturing and ex-port sectors essential for national resilience, and in which the US competes against UK and European allies who do not have similar 25% tariffs on these raw materials. The US will also increasingly compete with China in these spaces, both for raw materials and in finished product export markets, and the creation of tiered raw materials markets shifts demand to the low cost environment. This would be the opposite of this policy’s intent.
As a result of the proposed tariffs, members warn of loss on domestic and global market share for US manufacturing in the very industries US policy is seeking to promote.
It was noted that the US aerospace industry needs every possible competitive advantage in the global market, including as a matter of national resiliency.
Members cautioned that the new tariffs on Chrome, Tantalum, and Indium metals would be inflationary in a current climate far more sensitive to added inflationary pressures than that in which the original Section 301 tariffs were implemented. These tariffs would increase costs for both US industry and consumers.
The point was emphasized that diverse and competitive sources of raw material are required to support the resilience of critical US aerospace, energy, and electronics manufacturing and exports, and to promote this it is important to distinguish between critical raw materials and further downstream components and products with regards to tariff policy.
As such, members recommended removing HTS 8112.21.00 for Aluminothermic Chrome metal, HTS 8103.20.00 for Tantalum metal, and HTS 8112.92.30 for Indium metal from the final Section 301 modifications. It was suggested doing so would support critical US manufacturing without detracting from Section 301’s goals or US domestic EV, energy, electronics, processor, superalloy, and aerospace supply chains, and would in fact help preserve US critical supply chain and national resiliency.
Sincerely,
Noah Munro Lehrman
North America Committee Chair
Minor Metals Trade Association
