This morning in metals news, the E.U. approved new steel import curbs extending until 2021 with a vote Wednesday, the copper price picked up as the U.S. dollar loses momentum and the United States Trade Representative (USTR) says it will set up a system for exclusions if the tariff rate increases on the $200 billion of duties imposed on Chinese imports in September (currently sitting at 10%).
E.U. Moves Forward with New Steel Quotas
As expected, E.U. member states voted to impose new steel quotas, part of the ongoing response to the U.S.’s Section 232 tariffs imposed in March 2018 and fears of redirected steel supplies flooding Europe.
E.U. member states approved provisional measures in July 2018, but the approval Wednesday puts quotas into place that will extend to July 2021.
Copper Rises, Dollar Softens
The U.S. dollar was cruising ever-upward throughout the tail end of 2018, but that momentum has seemingly slowed of late.
The U.S. dollar and base metals like copper correlate inversely, meaning a drop in one typically presages a rise in the other.
As Reuters reported Wednesday, the LME three-month copper price jumped for a second straight day, moving up 0.8%.
The U.S. dollar index declined to start the year but has bounced back in the past week, sitting at 96.04 as Wednesday morning.
USTR to Allow for Exclusions if Tariff Rate Rises on Chinese Goods
According to a Bloomberg report, the USTR has promised two senators that there will be an exclusion request process on the previously announced $200 billion in tariffs on Chinese goods if the tariff rate rises to 25%.
The $200 billion tariff package, imposed in September, came at a 10% tariff rate, with a built-in increase to 25% as of Jan. 1, 2019.
That increase, however, was postponed, as the U.S. and China began a 90-day negotiating period to hash out trade differences.
Unlike the previous $50 billion tariff package announced last year, the larger tariff package was not looped into a tariff exclusion request process (that is, a process by which companies can make the case that they need exemptions from the duty).
However, according to the USTR letter cited by Bloomberg, the U.S. will allow for exemption requests if the tariff rate is ultimately elevated to 25%.