U.S. Department of Commerce proposes stiff tariffs on steel imports

WASHINGTON—The U.S. Department of Commerce is recommending stiff tariffs on steel imports into the U.S., encouraging representatives of the domestic steel industry but alarming U.S. tire manufacturers dependent on imported tire-grade steel cord.

On Feb. 16, Commerce released reports on its investigations of how steel and aluminum imports are affecting national security.

The agency carried out the investigations under Section 232 of the Trade Expansion Act of 1962, which empowers the federal government imports of goods and materials that might threaten national security.

In its report on steel, Commerce found that the U.S. is the world's largest importer of steel, with steel imports outstripping exports by nearly four to one.

Total worldwide excess capacity in steel is 700 million tons, nearly seven times annual U.S. steel consumption, the report said.

China alone produces nearly as much steel in a month as the U.S. does in a year, Commerce said. For certain types of steel, such as for electrical transformers, only one U.S. producer remains, it said.

Six basic oxygen furnaces and four electric furnaces have closed since 2000, and employment in the domestic steel industry has dropped 35 percent since 1998, according to the report.

It is now up to President Trump to determine what actions should be taken. Commerce recommended three alternative remedies:

• A global tariff of at least 24 percent on all steel imports from all countries;
• A tariff of at least 53 percent on all steel imports from 12 countries, including Brazil, China, Costa Rica, Egypt, India, Malaysia, South Korea, Russia, South Africa, Thailand, Turkey and Vietnam, with a quota from all other countries equal to 100 percent of their 2017 exports to the U.S.; or
• A quota on all steel products from all countries equal to 63 percent of each country's 2017 exports to the U.S.

The report also recommended an appeal process by which affected U.S. parties may seek an exclusion from tariffs or quotas.

According to the report, Commerce would grant exclusions based on lack of sufficient U.S. production capacity for specific steel products, or on specific natural security-based considerations.

Since early in the investigations, the U.S. Tire Manufacturers Association has testified that placing tariffs on imported tire-quality steel wire rod, cord and bead wire could cause substantial harm to the U.S. tire manufacturing industry.

Virtually all steel cord used in U.S. tire manufacturing is imported, and domestic steel producers cannot meet the volume or quality demands of the tire industry, the USTMA said.

"We support the need to protect American workers and our economy from unfair trade practices that threaten our economic and national security," Anne Forristall Luke, USTMA president and CEO, said about the Commerce report.

"However, we are concerned that the Department of Commerce's recommendations may have unintended consequences for domestic tire manufacturers and the workers and industries they support," Luke said. "USTMA members must retain the capability to import the specialized steel products that are vital to making tires in the United States."

The Alliance of American Manufacturing hailed the Commerce report.

"Trump is one step away from taking historic action to defend American jobs and security," said AAM President Scott Paul.

"Any exclusions deserve appropriate scrutiny," Paul said. "Otherwise, the Washington swamp will be filled with importers trying to undermine American jobs."

In the area of aluminum, Commerce recommended a tariff of at least 7.7 percent on all aluminum exports from all countries; a tariff of 23.6 percent on all aluminum products from China, Hong Kong, Russia, Venezuela and Vietnam; or a quota on all aluminum exports to the U.S. equal to 86.7 percent of their 2017 exports.

President Trump has until April 11 to make a decision on steel remedies and until April 19 on aluminum remedies.