On February 27, 2020, President Trump announced that he would not impose duties on imports of titanium sponge pursuant to his authority under Section 232 of the Trade Expansion Act of 1962, a statute that allows for the imposition of duties where imports threaten to impair the national security. The decision was well-received by much of the United States titanium industry and the many downstream users of titanium produced in the United States.
Approximately one year ago, the U.S. Department of Commerce initiated a Section 232 investigation concerning imports of titanium sponge as a result of a petition filed by Titanium Metal Corporation (“TIMET”) – the sole producer of titanium sponge in the United States. TIMET’s petition was filed on the heels of the company’s failed attempt to obtain relief from what it alleged were unfairly-traded imports from Japan and Kazakhstan under Title VII of the Tariff Act of 1930. The United States International Trade Commission (“USITC”) issued a rare negative preliminary determination in that investigation based on its findings that there was no reasonable indication that TIMET was materially injured or threatened with material injury by reason of imports of titanium sponge. The Commission’s determination was largely based on the fact that TIMET self-consumed nearly all titanium sponge it produced in the United States, did not supply titanium sponge to other domestic titanium producers, and thus did not compete with imports of titanium sponge that other domestic titanium producers consume in the production of downstream mill products. The USITC determination is available here.
The Presidential Memoranda issued as a result of the Commerce Department’s Section 232 investigation indicates that the Secretary of Commerce determined that imports of titanium sponge are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States. Although that report was transmitted to the President on November 29, 2019, it has not yet been made publicly available.
The memorandum also noted that nearly 95 percent of U.S. imports of titanium sponge are from Japan – a country with which the United States “has an important security relationship.” At least in part as a result of this relationship, on the Secretary of Commerce’s recommendation, the President determined it would be inappropriate to adjust imports at this time. The memorandum nevertheless directs the Secretaries of Defense and Commerce to form a working group to agree upon measures to ensure access to titanium sponge in the United States for national defense and critical industries in the case of an emergency.
Overall, the President’s determination was supportive of the position taken by the domestic titanium industry and the many downstream users of titanium mill products, including the defense and aerospace industries.