U.S. Commerce Dept. Recommends Tariffs, Quotas on Steel Imports

U.S. Commerce Dept. Recommends Tariffs, Quotas on Steel Imports

The U.S. Department of Commerce has recommended that President Donald Trump impose tariffs and quotas on imported steel from China and other countries.

U.S. steel imports and tariffs

The U.S. Department of Commerce has recommended that President Donald Trump impose tariffs and quotas on imported steel from China and other countries.

With the U.S. being the world’s largest importer of steel, the department’s recommendation includes a global tariff of at least 24% on all steel imports from all countries. The report with the recommendation, presented by department Secretary Wilbur Ross, says U.S. imports of steel are nearly four times its exports.

The report also recommends that a 53% tariff be placed on all steel imports from Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam. it suggests the U.S. put a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States. In addition, the report advises putting a quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.

The department says each of the remedies is intended to increase domestic steel production from its present 73% of capacity to approximately an 80% operating rate, the minimum rate needed for the long-term viability of the industry. The tariffs and quotas would be in addition to any duties already in place.

However, the report also recommends that a process be put in place to allow U.S. companies to request that certain products be exempt if the U.S. does not produce the product domestically or for national security considerations.

Depending on the industry, the recommendations were met with mixed reviews.

Anne Forristall Luke, president and CEO of the U.S. Tire Manufacturers Association (USTMA), said that the association appreciates Trump’s support for domestic manufacturing and production but is concerned that the proposed global tariffs and quota could bring “unintended consequences for domestic tire manufacturers and the workers and industries they support.” USTMA has said in the past that global tariffs, such as those proposed, may negatively impact the tire industry.

In a statement, she urged the Trump administration to exempt the tire industry from any steel tariffs and quotas and commit to establishing a process for timely review of exemption applications.

“We support the need to protect American workers and our economy from unfair trade practices that threaten our economic and national security. However… high-quality steel is critical for tire production. Domestic steel mills use a production process that is unable to produce the steel necessary to make tires,” she said. “USTMA members must retain the capability to import the specialized steel products that are vital to making tires in the United States. A disruption in tire manufacturing in the U.S. would harm our economy and threaten national security, since the U.S. military relies on the tire industry to provide high performing and durable tires to aid in our national defense. We strongly urge the Administration to exempt the tire industry from any such tariffs and quotas, or at the least commit to establishing a process for timely review of exemption applications.

In a joint statement, the National Tooling and Machining Association and Precision Metalforming Association said steep tariffs would “devastate” downstream U.S. steel-consuming manufacturers, which employ 6.5 million Americans.

“If these tariffs are imposed, the U.S. will become an island of high steel prices resulting in our customers simply importing the finished part and threatening thousands of jobs,” the statement said.

United Steelworkers (USW) International President Leo W. Gerard supports the recommendations made, saying the administration understands “unrelenting attacks and challenges that these industries critical to our nation’s security are facing from unfairly traded imports.”

In the report, the department says imports of steel and aluminum “threaten to impair the [U.S.] national security.” It cites China as the largest producer and exporter of steel and the largest source of excess steel capacity, which exceeds the total U.S. steel-making capacity.

On an average month, China produces nearly as much steel as the U.S. does in a year, according to the findings. As of Feb. 15, the U.S. had 169 antidumping and countervailing duty orders in place on steel. Of those, 29 are against China, and there are 25 ongoing investigations.

“These recommendations have the potential to focus on the bad actors in the world that historically and systemically cheat in international trade,” said Gerard. “We applaud that approach.”

So where do these recommendations go now? They’re currently being considered by the Trump administration, which could take a range of actions or no action based on the report.

Trump is required to make a decision on the steel recommendations by April 11 this year.

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