Metals News – Section 232 Balancing Act
A Range of Considerations
According to American Metal Market, President Trump is weighing a whole range of options submitted to him by Commerce Secretary Wilbur Ross, while the Section 232 investigations into steel and aluminum imports continue.
In a meeting with a bipartisan group of lawmakers, the possibilities discussed are expected to be overwhelmingly favorable to the US steel and aluminum sector, including tariffs, duties and import restrictions. This is particularly important given the push to increase infrastructure spending.
The trick will be to balance imports so that our own industries will be able to meet materials requirements while American steel and aluminum producers grow to fill domestic demand. It is important to prevent tariff wars or embargos which could stall US economic growth.
Trump said, “I look at it two ways: I want to keep prices down. But I also want to make sure that we have a steel industry and an aluminum industry. And we do that for national defense [because] if we have a conflict, we don’t want to be buying the steel from a country that we’re fighting – because that doesn’t work so well.”
Trump noted that “dumping from many countries” was to blame for the “decimated” state of the US steel and aluminum industries. “See what happened to U.S. Steel and these other companies? They were giants. And now they are hanging on for their life.”
The changes in tax and other policies have already had a positive effect on metals producers. U.S. Steel recorded a $159 million profit in the fourth quarter of 2017 – the most recent quarter for which financial results are available – in contrast to a $105 million net loss in the same quarter of 2016. The company expects the good times to continue to roll into 2018.
Tariff or Trade War?
A consortium of industry executives called Alliance for American Manufacturing has been calling for swift, aggressive action from President Trump and lawmakers on the Section 232 cases to defend America’s 80,000 steelworkers.
The flip side of the situation has been presented in a letter to Trump from 15 manufacturing trade associations whose members employ over 1 million people. The letter states that restrictions on basic steel imports will have a negative impact on national security, the economy and the steel industry by undermine our competitiveness and limit our ability to manufacture. It would likely leave US agricultural exports vulnerable to trade retaliation. Additional duties are not necessary because the steel industry is already protected by more than 160 anti-dumping and countervailing duty orders.