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Tariffs, Quotas on Titanium Sponge Could Result from New Section 232 Investigation

Thursday, March 07, 2019
Sandler, Travis & Rosenberg Trade Report

The Department of Commerce initiated March 4 an investigation under section 232 of the Trade Expansion Act of 1962 to determine whether the present quantity or circumstances of titanium sponge imports threaten to impair U.S. national security. An affirmative determination could result in import restrictions such as tariffs or quotas. Press sources note that nearly all U.S. imports of titanium sponge come from Japan and Kazakhstan.

According to a DOC press release, titanium sponge is the primary form of titanium metal from which almost all other titanium products are made. Titanium is used in the production of strategic articles such as military aircraft, space vehicles, satellites, naval vessels, missiles, and munitions. It is also widely used in critical infrastructure and commercial applications such as civilian aircraft, chemical plants, oil and gas plants, electric power and desalination plants, building structures, automobile products, and biomedical devices. The DOC adds that imports account for more than 60 percent of U.S. titanium sponge consumption and that currently only one facility in the U.S. has the capacity to process titanium ore into the sponge used in manufacturing.

If the DOC (which must consult with the Department of Defense) concludes that titanium sponge is being imported in such quantities or under such circumstances as to threaten to impair U.S. national security, and the president concurs (a decision he would have up to 90 days after the DOC’s report to make), the president would have broad authority to adjust imports, including through the use of tariffs and quotas. Any import adjustments, or any other non-trade-related actions the president may elect to take, would be imposed within 15 days of the president’s determination to act.

The DOC has up to 270 days to conclude this investigation and submit its report and recommendations to the president. A hearing date and request for public comments are expected to be published shortly in the Federal Register.

It is worth noting that in October 2017 the International Trade Commission terminated investigations that could have led to antidumping and countervailing duties on titanium sponge from Japan and Kazakhstan after determining that there is no reasonable indication that a U.S. industry is materially injured or threatened with material injury by reason of imports of such goods. Those investigations were reportedly initiated at the request of the same companies that requested the Section 232 investigation.

For more information on this Section 232 investigation and how to mitigate any potential negative impacts on your business, please contact Kristen Smith at (202) 730-4965.

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