Wilbur Ross, the US Commerce Secretary, has released reports on his department’s investigations into the impact on US national security from imports of steel mill products.
An announcement by the US Department of Commerce stated that the investigations were carried out under Section 232 of the Trade Expansion Act of 1962, as amended. All classified and business confidential information in the reports was redacted before the release.
“I am glad that we were able to provide this analysis and these recommendations to the President,” Secretary Ross said. “I look forward to his decision on any potential course of action.”
The Department of Commerce found that the quantities and circumstances of steel and aluminum imports ‘threaten to impair the national security,’ as defined by Section 232.
The reports are currently under consideration by the President, and no final decisions have been made with regard to their contents. The President may take a range of actions, or no action, based on the analysis and recommendations provided in the reports. Action could include making modifications to the courses of action proposed, such as adjusting percentages.
The President is required to make a decision on the steel recommendations by 11 April 2018.
Commenting on these latest developments, Philip K. Bell, President of the Steel Manufacturers Association (SMA) commented: “We applaud the release of the findings and recommendations contained in the Section 232 Report. Secretary Ross has accurately concluded that steel imports threaten to impair our national security from both a defense and critical industry standpoint. The Secretary has laid out options that have the potential to be meaningful and effective to address the threat the industry faces in light of global excess capacity and relentless steel imports.”
According to the SMA, the Commerce recommendations include a global tariff of at least 24% on all steel imports from all countries. A second recommendation is a targeted tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports. A third recommendation includes a quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.
According to Bell, Donald Trump now has options before him ‘that can move our industry forward and help steelmakers operate at rates that will allow US producers to reinvest to maintain and strengthen the industry to ensure US steel production can survive to serve US national defense interests’.
“The release of the report represents an important increase in transparency in this national security process and we will continue to analyse its findings. We look forward to a decision by the President, and working with the steel industry, Congress and interests on all sides of this vital issue,” Bell added.
EUROFER (the European Steel Association) urged President Trump not to pull the trigger on a trade war.
Axel Eggert, Director General of EUROFER commented: “The EU steel industry has long been a reliable supplier of high quality steels to the US, sending just over 3Mt of steel there in the first 11 months of 2017. The EU and US are close partners and NATO allies,” he said, adding any restriction on steel imports from the EU based on Section 232 would undermine the partnership.
“EU and US producers have both been suffering financial losses and closures since the financial crisis caused by trade distortions from third countries”, sympathised Mr Eggert. “Import pressures have significantly affected each market. Until now, both have used targeted trade remedies against demonstrably dumped steel products from third countries – and the EU and US are active members on the G20 Forum on Steel Excess Capacity. We are committed to work with the US and other countries to swiftly eliminate the source of these distortions: global overcapacity. This will not be achieved with scattergun, unilateral measures”.
EUROFER is concerned that whichever alternative President Trump decides to reach for – other than declining to act, as he is also able to – there could be a massive deflection of previously US-bound steel products to the EU’s open market. This could seriously and unfairly injure EU producers, breaking the fragile recovery the sector has seen over the past few months.
“Were either of the two alternatives deployed we would expect swift and vigorous counter action by the EU in order to prevent any potential negative impact on our industry, including necessary safeguard measures mirroring the product scope and types of any US Section 232 trade measures”, emphasised Mr Eggert. “The EU has an arsenal of trade remedies and safeguards available to defend its interests. These can be ready to launch in very short order in response to an economic threat, and EU industry will demand their immediate application”.
“We urge the US President: Do not pull the trigger on a new trade war”, concluded Mr Eggert.
Recommendations of the Steel Report
Secretary Ross has recommended to the President that he consider the following alternative remedies to address the problem of steel imports:
• A global tariff of at least 24% on all steel imports from all countries, or
• A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or
• A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.
The US Commerce Department claims that each of these remedies is intended to increase domestic steel production from its present 73% of capacity to approximately an 80% operating rate, the minimum needed for the long term viability of the industry. Each remedy applies measures to all countries and all steel products to prevent circumvention.
According to the USCD, the tariffs and quotas would be in addition to any duties already in place. The report recommends that a process be put in place to allow the Secretary to grant requests from US companies to exclude specific products if the US lacks sufficient domestic capacity or for national security considerations. Any exclusions granted could result in changed tariffs or quotas for the remaining products to maintain the overall effect.