Calls for circumvention duties on electrical steel (GOES) imports from Canada and Mexico

Electrical steel needs protections from imported materials, a bipartisan group of lawmakers on Wednesday urged President Trump in a letter sent on 15th April 2020.

The letter was signed by two dozen members of Congress, many from Ohio and Pennsylvania. Both states are home to AK Steel, currently the sole producer of electrical steel. The group requested to address the “blatant circumvention” of Section 232 tariffs on electrical steel by including derivatives in the scope of the tariffs.

The group believe that the derived articles or value-added by-product of electrical steel such as laminations and cores should also be included under section 232. “Mexico and Canada are being used as a staging ground for this blatant circumvention of the Section 232 program”, the letter reads. AK Steel also warned that it might idle both Butler and Zanesville in 2020 due to the imported materials.

Commodity Inside confirms that there is no electrical steel producer in Mexico and Canada. All grain-oriented electrical steel (GOES) are imported and then further processed locally. This implies that the GOES is originally manufactured outside Canada and Mexico but then converted before exporting to the US. This situation can create an issue for Canadian and Mexican exporters under the USMCA rule of origin clause.

However, given the stringent requirements for efficiency in the power market, any such duties may cause a shortage of the required materials and increase prices.

Commodity Inside has a detailed and unrivalled understanding of the electrical steel market and its competitive landscape. You may be interested in exploring our latest edition of Electrical Steel Market Outlook.

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