U.S. launches probe of steel imports
Investigation is being justified on the basis of national security needs
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.