Turkish mills hopeful for Section 232 removal after US elections, others see no change

Some Turkish mills seem hopeful that US will remove Section 232 duties against Turkey following the elections, while others are not expecting much of a change in US trade policies following the presidential election, no matter the result.

The relations between Turkey and the US showed ups and downs during President Donald Trump’s presidency. Trump raised tariffs on imports of Turkish steel from 25% to 50% in August 2018 under Section 232 law, amid increased political tension between the countries over Turkey’s detention of a US religious leader. Turkey’s tariff rate on steel was later dropped back to 25% in May 2019, amid some improvement in relations between the countries.

Trump even threatened to destroy Turkey’s economy during the pastor Brunson crisis, but after the crisis was resolved, the presidents of the both countries began to call each other as friends.

However, a win by democratic presidential nominee Joe Biden could also raise tensions between Turkey and US again as long as Recep Tayyip Erdogan remains as president, as Biden previously said he will work with the opposition leaders in Turkey for a government change, which drew both the ruling and the opposition parties’ reactions in Turkey.

Independently from the election results, some Turkish steel producers seem hopeful for the removal of the Section 232 duties against the country after the elections.

“As Turkey and [the] US are strategic partners, [the] US should lift the Section 232 tariffs on Turkey after the elections, independently [of] who will win, to reach the goal of $100 billion in trade between the countries,” Veysel Yayan, general secretary of the Turkish Steel Producers’ Association, told S&P Global Platts, noting the goal previously set by Erdogan and Trump. “I am hopeful that after the elections the new president (Trump or Biden) will take a step in this regard.”

“If Biden will win, I don’t think that his previous statements about Turkish president Recep Tayyip Erdogan will be a determinant factor for the relations between the countries, as Turkey and US are strategic partners for years and good economic and political relations will be in favor of both countries,” he added. “Turkish steel is well known in US with its high quality. However, in the absence of Turkish steel, Vietnam became one of US top steel supplier. To remove Section 232 against Turkey, like some other countries, will be also beneficial for the steel consuming sectors of the US.”

Ugur Dalbeler, CEO of major Turkish steelmaker Colakoglu, who is also the vice president of Turkish Steel Exporters’ Union (CIB), however was not as optimistic.

“I am not expecting a much change in US policies after the elections,” he told Platts. “Actually, Liberals (Democrats) have a more protectionist approach than Republicans. However, due to his character Trump made some moves (Section 232) that others couldn’t temp to.”

Even under a Biden administration, the new US government may prefer to maintain these duties for a while, as countries have adopted a more protectionist attitude in recent years, due to the pandemic, he noted.

“So, independently of the election results, I am expecting this environment to continue for a while,” Dalbeler said.

The US share in Turkey’s overall steel exports was at 15% in 2016, however, this share fell to as low as 3% due to the Section 232 duty in 2019, according to Turkish Steel Exporters’ Union (CIB) data. Turkish mills were exporting 2.4 million mt of steel to the US in 2016, but this figure declined by 85% to just 350,00 mt in 2019, representing a loss of $850 million.

— Cenk Can