Trump’s 1st Year Did Not Go as Expected for Steel Industry
The first year of the Trump administration has been a counterintuitive one for steel companies.
President Donald Trump campaigned on a protectionist “America first” platform and promises to increase the number of steel jobs in the United States, and as recently as June, he said, “Wait till you see what I’m going to do for steel and your steel companies.” Though he has not backed away from those positions, garida net his administration has been slow to act on them amid reports of disagreements within the White House about the risks and benefits of measures to limit imports. The Commerce Department, for example, still has not released a report on the Section 232 investigation of the impact of steel imports on national security that it began in April.
This has led to some disappointment among domestic steel producers who had expected Trump to quickly put up barriers to foreign steel. With the prospect of tariffs and other trade restrictions looming, though, non-U.S. companies have aggressively shipped steel to America, resulting in imports through the first 11 months of 2017 being 17.7 percent higher than they were during the same time the previous year.
In December, Nucor said that its fourth quarter earnings would be lower than expected because of “the import surge experienced in the summer of 2017.” This followed a September announcement by ArcelorMittal that it would lay off nearly three-fourths of its 207 mix workers at a plant in Conshohocken, Penn., a move the company blamed in part on “the ongoing surge of unfairly traded imports of steel.”
The New York Times quoted Alliance for American Manufacturing President Scott Paul as saying that he had “a profound sense of frustration that the president has been using steelworkers as political props.”
“The president’s own words and lack of action have actually put the industry in a worse position than if he had done nothing at all,” Paul said.
Conservative Group Opposes Section 232 Investigation
The Commerce Department should halt its Section 232 investigation of the impact of steel imports on national security, a conservative advocacy group says.
President Donald Trump on April 20 issued a presidential memorandum directing the secretary of commerce to conduct a Section 232 investigation “to determine the effects on national security of steel imports.” While it had been thought that the investigation would be completed by June, no report has been released yet. The Trump administration indicated in late 2017 that it would return to the issue after Congress passed tax reform legislation, which it did in December.
The National Taxpayers Union, in a Dec. 12 letter, warned Commerce Secretary Wilbur Ross against continuing with an investigation that could lead to new restrictions on the steel trade.
“Activating Section 232 under the guise of national security would be a misuse of policy intended for genuine emergencies, break longstanding precedent, and adversely impact global alliances that we rely on to keep Americans safe from foreign threats,” the group wrote. It added, “Restricting commerce through tariffs would increase costs for existing manufacturers who rely on lower-priced steel and aluminum imports. Any change in the delicate supply chain will increase the final cost of production, which would, in turn, raise costs for consumers.”
The organization also noted that defense accounts for only about 3 percent of the United States’ steel demand and that the “vast majority” of steel imports come from allies. In addition, it cautioned that, “Restricting imports of steel or aluminum via Section 232 would only encourage America’s trading partners to use similar tactics to block the exports of U.S. goods, open the door to trade battles, and discourage imports of needed goods.”
AIIS has frequently raised these and other points during the past nine months as it has worked aggressively to educate regulators, lawmakers, the press and the public about the negative consequences that could result from imposing new limits on the free and fair trade of steel.
National Security Strategy Document Airs Grievances About ‘Unfair’ Trade
The “National Security Strategy” unveiled by President Donald Trump in December takes a protectionist stance on trade issues.
Trump released the strategy document – which, echoing a campaign theme, states that it “puts America first” – on Dec. 18. It includes multiple complaints about “unfair” trade practices by other nations, especially in the section titled, “Promote American Prosperity.”
“The United States distinguishes between economic competition with countries that follow fair and free market principles and competition with those that act with little regard for those principles,” the document states, adding, “The United States will pursue enforcement actions when countries violate the rules to gain unfair advantage. The United States will engage industrialized democracies and other likeminded states to defend against economic aggression, in all its forms, that threatens our common prosperity and security.”
Reuters reported that “a senior Trump administration official” linked the document to the Commerce Department’s Section 232 investigation of the national security impact of steel imports, saying, “The strategy highlights the importance of industrial strength, and that is also an element of the 232 analysis.”
“I think there will be enforcement actions by the U.S. that are related to the non-market challenge from China,” the official said. “The strategy recognizes that China is a rival and that puts into context that we need to take steps to protect American interests and American workers.”
Commerce Department Announces Affirmative Findings in Multiple Cases
The Commerce Department on Dec. 5 announced a preliminary affirmative ruling in a circumvention case involving China and Vietnam.
In 2015, antidumping and countervailing duties were imposed on corrosion-resistant steel and cold-rolled steel flat products from China. Following this, shipments of these products from Vietnam to the United States increased sharply. Commerce found that some of those imports used substrate from China that would otherwise have been subject to duties.
“U.S. law provides that Commerce may find circumvention of [antidumping/countervailing duty] orders when merchandise that is the same class or kind as merchandise subject to existing orders is completed or assembled in a third country prior to importation into the United States,” the agency explained.
The department is expected to announce a final determination in the case by Feb. 16.
Separately, on Nov. 21, the Commerce Department announced affirmative final determinations in antidumping duty investigations of imports of carbon and alloy steel wire rod from Belarus, Russia and the United Arab Emirates.
Imports of those products in 2016 totaled $10.4 million from Belarus, $32.3 million from Russia and $7 million from UAE.
The dumping margins were found to be 436.8 percent to 756.93 percent for Russia, 280.02 percent for Belarus and 84.1 percent for UAE.
The International Trade Commission is scheduled to issue its final determinations in the cases by Jan. 5.
And on Dec. 5, Commerce announced affirmative final determinations in the countervailing duty investigations of imports of cold-drawn mechanical tubing from China and India.
In 2016, imports of that tubing totaled $29.4 million from China and $25 million from India.
The subsidy rates were found to be 8.02 percent to 42.6 percent for India and 18.27 percent to 21.41 percent for China.
Final determinations in the cases by the International Trade Commission are expected by Jan. 18.