U.S. launches probe of steel im­ports

Investigation is be­ing jus­ti­fied on the ba­sis of na­tional se­cu­rity needs

The Washington Post - - ECONOMY & BUSINESS - BY ANA SWAN­SON ana.swan­son@wash­post.com

The Trump ad­min­is­tra­tion has launched an investigation into whether for­eign im­ports of steel com­pro­mise U.S. na­tional se­cu­rity, a step to­ward ful­fill­ing a cam­paign prom­ise to crack down on the al­legedly un­fair trad­ing prac­tices of coun­tries in­clud­ing China.

Pres­i­dent Trump gath­ered steel in­dus­try ex­ec­u­tives and re­porters in the Oval Of­fice on Thurs­day for his sign­ing of a memo di­rect­ing the Com­merce Depart­ment to ex­pe­dite the investigation, which was of­fi­cially launched Wed­nes­day night. Trump called the sign­ing “a his­toric day for Amer­i­can steel and, most im­por­tantly, for Amer­i­can steel­work­ers.”

Trump added that the ad­min­is­tra­tion would re­lease more in­for­ma­tion in the next two weeks about its plans for the North Amer­i­can Free Trade Agree­ment, which can­di­date Trump re­peat­edly promised to rene­go­ti­ate. He also crit­i­cized Canada’s be­hav­ior un­der NAFTA, say­ing that “what they’ve done to our dairy farm­work­ers is a dis­grace” and that NAFTA had been “a dis­as­ter for our coun­try.”

In a brief­ing Thurs­day morn­ing about the investigation, Com­merce Sec­re­tary Wil­bur Ross said the re­view would con­sider how much steel the United States needs to de­fend it­self, and whether do­mes­tic ca­pac­ity meets those re­quire­ments. Steel im­ports now make up more than 26 per­cent of the en­tire U.S. mar­ket­place, and the re­port will ex­am­ine to what ex­tent those im­ports im­pinge on U.S. eco­nomic and na­tional de­fense se­cu­rity, Ross said.

The investigation could re­sult in the Com­merce Depart­ment’s rec­om­mend­ing that the United States im­pose broad tar­iffs on steel im­ports, Ross said. “The im­por­tant ques­tion is pro­tect­ing our de­fense needs. And we will do what­ever is nec­es­sary to do that, but we’ve come to no con­clu­sion yet, be­cause the study is just re­cently be­gun.”

The investigation, which was ini­ti­ated by the Com­merce Depart­ment rather than by the steel in­dus­try, re­vives a sec­tion of a lit­tle-used trade law, the 1962 Trade Ex­pan­sion Act. Sec­tion 232 of the law al­lows the gov­ern­ment to im­pose a wide va­ri­ety of bar­ri­ers on steel im­ports for na­tional se­cu­rity rea­sons.

Speak­ing from the Oval Of­fice, Trump de­clined to say that the or­der was di­rected at China, which has about half of the world’s steel ca­pac­ity and has flooded the global mar­ket with cheap steel in re­cent years.

“This has noth­ing to do with China,” Trump said. “This has to do with, world­wide, what’s hap­pen­ing. The dump­ing prob­lem is a world­wide prob­lem.”

He added that the investigation could be com­pleted in as lit­tle as 50 days, well ahead of the 360-day max­i­mum set by the law.

Ex­ec­u­tives from ArcelorMit­tal, Nu­cor, U.S. Steel, the United Steel­work­ers union and other com­pa­nies and in­dus­try groups were present at the sign­ing. U.S. steel stocks surged Thurs­day, with United States Steel climb­ing 7.35 per­cent to close the trad­ing day. AK Steel soared 8.6 per­cent, and Nu­cor gained 4.74 per­cent.

The U.S. steel in­dus­try has been shed­ding jobs for decades, partly be­cause of the devel­op­ment of in­creas­ingly ef­fi­cient and au­to­mated steel fur­naces, and partly be­cause of grow­ing man­u­fac­tur­ing ca­pac­ity in coun­tries such as China. Trump’s pro­tec­tion­ist trade mes­sage res­onated in steel-pro­duc­ing states, such as Ohio and Penn­syl­va­nia, that were vi­tal to his elec­tion.

Yet some an­a­lysts say that if the United States were to re­strict steel im­ports, that could raise the price of steel for U.S. com­pa­nies that use the metal to make other prod­ucts, and make it harder for those coun­tries to com­pete abroad.

In the brief­ing, Ross said this con­sid­er­a­tion would be weighed in Com­merce’s ul­ti­mate re­port. “It’s a ques­tion of bal­anc­ing one’s pri­or­i­ties,” he added.

Tadaaki Ya­m­aguichi, the chair­man of the Ja­pan Steel In­for­ma­tion Cen­ter, which ad­vo­cates for the Ja­panese steel in­dus­try in the United States, said Thurs­day that the investigation would be bad for the U.S. econ­omy, in­clud­ing in­dus­tries such as con­struc­tion and man­u­fac­tur­ing that de­pend on steel im­ports.

“There are far more Amer­i­can jobs at stake in the steel-con­sum­ing sec­tor than there are in do­mes­tic steel pro­duc­tion, and this ac­tion will put many Amer­i­can jobs at risk be­cause prices will rise and com­pe­ti­tion will de­cline,” he said. “Anti-com­pet­i­tive ac­tion and pro­tec­tion­ism is not the Amer­i­can way. All this is do­ing is rig­ging the sys­tem and cor­rupt­ing the mar­ket­place.”

Also on Thurs­day, U.S. Steel pre­sented the U.S. In­ter­na­tional Trade Com­mis­sion, a Wash­ing­ton­based trade agency, with a claim that Chi­nese steel­mak­ers were un­der­cut­ting com­peti­tors by col­lud­ing to set their prices. A trade judge threw out the claim last Novem­ber, ar­gu­ing that the agency did not have ju­ris­dic­tion over an­titrust cases, but the steel in­dus­try and politi­cians have lob­bied the com­mis­sion to re­hear the case.

Others won­der whether the new investigation may be eco­nomic pro­tec­tion­ism mas­querad­ing as a na­tional se­cu­rity mea­sure.

In 2001, the last time the United States in­ves­ti­gated the steel in­dus­try un­der Sec­tion 232, the re­port found that the De­fense Depart­ment’s an­nual peace­time re­quire­ment for steel was less than 0.3 per­cent of the U.S. in­dus­try’s out­put by weight. At the time, the re­port con­cluded that im­ports of iron ore and semi-fin­ished steel did not threaten to im­pair U.S. na­tional se­cu­rity.

“The truth is that the mil­i­tary uses a very small per­cent of do­mes­tic steel out­put,” said Jeff Bia­los, a lawyer who pre­vi­ously worked in the de­part­ments of De­fense and Com­merce and brought a Sec­tion 232 case on im­ported oil.

Thurs­day’s me­moran­dum came a week af­ter Trump ap­peared to walk back some of the most prom­i­nent eco­nomic prom­ises of his cam­paign. Trump last week de­clined to la­bel China a cur­rency ma­nip­u­la­tor, de­spite cam­paign prom­ises to do so, and he ex­pressed sup­port for the Ex­port-Im­port Bank af­ter pre­vi­ously crit­i­ciz­ing the credit agency.

Trump made bold and of­ten in­flam­ma­tory prom­ises about trade pol­icy on the cam­paign trail, pledg­ing to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment and im­pose tar­iffs of 45 per­cent on im­ports from China and 35 per­cent on U.S. com­pa­nies that moved man­u­fac­tur­ing fa­cil­i­ties to Mex­ico.

Since tak­ing of­fice, his ac­tions on trade have been more muted. The pres­i­dent signed a me­moran­dum Jan. 23 with­draw­ing the United States from the Trans-Part­ner­ship and on March 31 signed two ex­ec­u­tive or­ders di­rect­ing re­view of trade prac­tices. Damian Paletta con­trib­uted to this re­port. More at wash­ing­ton­post.com/ news/ wonkblog


Pres­i­dent Trump, ac­com­pa­nied by Com­merce Sec­re­tary Wil­bur Ross, sec­ond from left, and others, talks about a di­rec­tive on in­ves­ti­gat­ing steel im­ports. He de­clined to sin­gle out China in his re­marks.

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