In September the US Trade Representative consulted on proposed additions to the USTR’s Section 301’s 25% import duties, extending this tariff level 3 subheadings of the HTS code covering certain tungsten products and proposed increasing tariffs to 50 percent for 2 subheadings covering wafers and polysilicon (see 89 Federal Register 76581).
The five subheadings proposed for tariff increases were:
· 8101.94.00 (Tungsten, unwrought (including bars and rods obtained simply by sintering)).
· 8101.99.10 (Tungsten bars and rods (o/than those obtained simply by sintering), profiles, plates, sheets, strip and foil).
· 8101.99.80 (Tungsten, articles nesoi).
· 2804.61.00 (Silicon containing by weight not less than 99.99 percent of silicon).
· 3818.00.00 (Chemical elements doped for use in electronics, in the form of discs, wafers etc., chemical compounds doped for electronic use).
The request for comments closed on 22 October 2024. The MMTA as an association cannot take a position on the proposed tariffs, 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. The response submitted by the MMTA’s North America committee, taking the anonymised member feedback into account, is published here.
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-2024-0016)
AGENCY: Office of the United States Trade Representative (USTR)
ACTION: Request for industry comments
Dear Ambassador Tai and Mr. Millian,
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 US members advised the 25% tariffs on tungsten metal from China could impact critical US industry and key manufacturing and export sectors vital for national resiliency. These industries include aerospace, superalloy, electronics, and energy sectors, for which tungsten is an raw material. Members emphasized that tariffs on raw materials for which there is currently insufficient domestic production could hamper domestic supply and harm domestic industrial consumers.
A member stressed that domestic availability of supply is not necessarily the same as domestic production. China consistently comprises over 80% of global tungsten mine production, and US imports for consumption. China has 52% of global tungsten reserves. Due to tungsten’s specialized technical applications, near term substitution is not possible.
Members advised that the US does not have sufficient commercially significant domestic tungsten metal production to satisfy US domestic consumption requirements, neither does the global market without China. Timelines for developing new alternatives are long. As a result, members advised the US would continue consuming Chinese tungsten, and tariffs would directly increase raw materials costs for crucial US industries. Increased costs would be passed along in turn to domestic and export customers, damaging US manufacturing’s global competitiveness, resiliency, and long-term viability.
The situation for US industry is exacerbated as this comes immediately after similar enactments on tantalum and chromium affecting the same essential sectors.
Members stressed that US manufacturers compete in critical global technology markets, including aerospace and energy, against third party jurisdictions with no such tariffs on tungsten and other crucial metals. It was specifically noted that US aerospace can ill afford additional impediments to competitiveness. Members warned this could lead to loss of US market share domestically and globally for these industries, and shift current and future downstream production to third party locales lacking such tariffs.
A member stressed that with tariff policy it is crucial to differentiate between essential raw materials, such as tungsten metal, from downstream components and finished products. Members cautioned proposed tariffs on tungsten metal as a raw material increases US critical supply chain uncertainty, volatility, and potential for disruption.
Concerns were raised that increased costs and uncertainty would also deter investment, hampering domestic growth and innovation.
Members warned this policy proposal escalates the environment for further retaliatory export restrictions on critical minerals for which the US does not have alternatives, as has happened with critical minerals such as germanium and gallium, eroding domestic access. It was advised that in order to make domestic raw material producers more competitive, the administration should focus on lowering cost for domestic producers. This, rather than implementing raw material tariff policies which raise costs and harm competitiveness and viability for domestic consumers and essential manufacturers, was suggested as a more effective method of assuring US resiliency in a global environment.
Members suggested immediate implementation of expedited financial, infrastructure, and investment support to promote domestic raw material. As domestic raw material production will not always be at a cost benefit versus global supply, it was suggested the administration develop alternative methods to incentivize consumer preference for domestic material.
Members also found the short timeframe of raw material tariffs modifications to be problematic for industry, and urged the administration to consider the current proposed tariff on tungsten and it’s broader national economic and resiliency implications further before finalizing or implementing any change.
Members advocated for re-evaluation of the administration’s current and planned aggressive tariff policy on critical minerals and essential raw materials more broadly. They encouraged further consultation with raw material consumers to find better ways of ensuring the resiliency of US industry and critical mineral raw supply without causing unintended deleterious effects on crucial US manufacturing sectors from proposed tungsten metal tariffs.
In sum, responding members advised the administration not to implement the proposed 25% tariffs on tungsten metal, but rather seek other policies to more effectively achieve the aim of national supply chain resiliency.
Sincerely,
Noah Munro Lehrman,
North America Committee Chair
Minor Metals Trade Association
Notes by the MMTA
Public responses to the consultation can be viewed HERE
According to data from the US International Trade Commission, China is the main source of imports into the US of unwrought and wrought tungsten covered by the three tariff codes proposed for the additional 25% tariff.
For unwrought tungsten including sintered bar and rod under HS code 8101.94.00 China accounted for 96% of imports for internal consumption in 2023 (up from 80% in 2020 when another substantial source was Vietnam), an for 96.5% in the first eight months of 2024. For bars, rods and other semi-fabricated products under HS code 8101.99.10 China made up 78.7% of imports for US internal consumption last year, down from 87.7% in 2022 as imports from Austria increased, before rising to 91.5% in the first eight months of 2024 as the trend reversed. For HS code 8101.99.80 more than 81% came from China in 2023.
