Here's one aspect of the Section 232 steel/aluminum tariff removal agreements/understandings mentioned in a post last Friday (the excerpt below is from the agreement with Canada):
After extensive discussions on trade in steel and aluminum covered by the action taken pursuant to Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862), the United States and Canada have reached an understanding as follows:
...
4. The United States and Canada will establish an agreed-upon process for monitoring aluminum and steel trade between them. In monitoring for surges, either country may treat products made with steel that is melted and poured in North America separately from products that are not.
5. In the event that imports of aluminum or steel products surge meaningfully beyond historic volumes of trade over a period of time, with consideration of market share, the importing country may request consultations with the exporting country. After such consultations, the importing party may impose duties of 25 percent for steel and 10 percent for aluminum in respect to the individual product(s) where the surge took place (on the basis of the individual product categories set forth in the attached chart). If the importing party takes such action, the exporting country agrees to retaliate only in the affected sector (i.e., aluminum and aluminum-containing products or steel).
The idea here is that after the removal of the duties there might be new duties imposed in order to protect against import surges (such duties would not be consistent with NAFTA/WTO rules), and that retaliation (also outside the rules) would be expected, subject to certain limits.
But there doesn't seem to be a mechanism to resolve disputes over any of this through a neutral adjudicator. Without such an adjudicator, how will the process work? If the United States thinks there is a surge "meaningfully beyond historic volumes," but Canada and Mexico do not, who will resolve that disagreement? Going in the other direction, the retaliation is supposed to be "only in the affected sector," but if Canada and Mexico believe the United States is not complying with its obligations in imposing the tariffs, would they comply with the limits on retaliation? Without neutral adjudication to govern all this, it seems like the situation could turn into an escalating tariff war pretty quickly.
