President Trump recently announced that he will not impose national security-related import restrictions on titanium sponge, and the reason he gave offers some hope that he will refrain from similar measures against automobiles and auto parts.
Titanium sponge is the primary form of titanium metal, which 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.
In a Feb. 27 memorandum, the president said that following a section 232 investigation the Department of Commerce determined that imports of titanium sponge threaten to impair U.S. national security by depressing the price of U.S. titanium sponge and discouraging recapitalization and modernization of the aging production facility of the remaining U.S. producer. The DOC concluded that if this facility ceases operation the U.S. will have no active domestic capacity to produce titanium sponge for national defense and critical infrastructure needs and instead will be completely dependent on imports.
In light of this determination the president has broad authority to adjust imports of titanium sponge, including through the use of tariffs and quotas. However, he opted not to do so, instead ordering the creation of a working group tasked with finding ways to ensure access to titanium sponge in the U.S. “for national defense and critical industries in an emergency.”
In explaining this decision the president pointed out that 94.4 percent of titanium sponge imports in 2018 were from Japan and that the U.S. “has an important security relationship with Japan, including our shared commitment to eliminating the North Korean nuclear threat; our decades-old military alliance; and our strong economic and strategic partnership.”
Those same factors are present in the U.S. relationship with the European Union, which has been one of the primary targets of a threat by the president to impose Section 232 tariffs of up to 25 percent on imports of automobiles and auto parts. The administration missed a November 2019 deadline for deciding whether to proceed with those tariffs and has been virtually silent on the matter since then. There has been some speculation that the president no longer has legal authority to impose such tariffs, but administration officials have rejected that interpretation.
For more information on Section 232 investigations and how to mitigate any negative impacts on your business, please contact trade consultant Nicole Bivens Collinson at (202) 730-4956 or trade attorney Kristen Smith at (202) 730-4965.