Steel and Aluminum Tariffs Would Put Jobs and National Security at Risk

February 16th, 2018

Today, Secretary Wilbur Ross released the results of the U.S. Department of Commerce’s Section 232 investigations into steel and aluminum imports and the alleged impact that they have on U.S. national security. While the president has the final authority to implement any tariffs, Secretary Ross and the Department of Commerce’s recommendations are troubling. For instance, the report includes recommendations for tariff rates as high as 53 percent on steel imports and 23.6 percent on aluminum imports.

The President believes that foreign steel and aluminum imports are causing harm to domestic manufacturers and threatening our ability to produce steel in the U.S. for military use. However, in 2017, domestic steel manufacturers supplied 75 percent of U.S. steel demand and only 3 percent was used for national security applications. In short, the U.S. steel industry has more than enough capacity to supply our national security needs.

In response to the President’s Section 232 trade review, the American Wire Producers Association (AWPA), on behalf of 15 U.S. manufacturers and organizations, sent a letter to the president and U.S. Trade Representatives arguing against tariffs. The AWPA letter presents a compelling argument and concludes that new tariffs on steel and aluminum are not only a threat to American jobs but also to U.S. national security.

The simple fact is that more workers, consumers, industries and companies would suffer, due to increased prices, than would benefit from imposing new tariffs on steel and aluminum. For instance, the signatories of the AWPA letter collectively employ more than 1 million Americans at more than 30,000 factories and plants throughout the United States.

Another letter submitted to President Trump by the American Institute for International Steel (AIIS) on behalf of 120 corporate members explains that nearly 1.3 million U.S. jobs and $240 billion in economic activity is supported by steel port activities. These employment numbers significantly dwarf the 80,000 people that the U.S. basic steel industry employs. New tariffs on steel would benefit a small minority of the industry while placing the majority in a precarious situation.

The U.S. companies that manufacture steel products source most of their steel requirements from domestic producers, but access to global supply chains remains critical to promoting competitiveness and the ability to produce value-added products here in the U.S. Limiting access will result in lost business and jobs for downstream steel manufacturers as well as reduced purchases from the domestic basic steel industry. In other words,

“Everyone in the US steel supply chain will be damaged by restrictions on steel imports.”

Tariffs, or quotas, would also jeopardize U.S. national security. Downstream producers provide the U.S. military with everything from cables and fasteners for military aircrafts to steel-plated doors and floors for military vehicles. These producers are also critical to ensuring America’s transportation and water infrastructure is safe. Imposing tariffs will negatively affect U.S. downstream steel manufacturers which will ultimately harm the U.S. military and infrastructure safety.

In fact, the U.S. basic steel industry is doing quite well, and the implementation of tax reform and a potential infrastructure bill will only further these impressive financial results. For example, the AWPA cites,

“Nucor Corporation reported its best earnings since before the 2008 recession. Its net earnings increased by 65% over 2016, reaching $1.1 billion. Likewise, Steel Dynamics reported record steel shipments in 2017 with record operating income of $1.1 billion.”

Compounding this is the fact that the United States has been aggressive in combating unfairly-traded steel imports. Currently, “there are more than 160 antidumping (AD) and countervailing duty (CVD) orders in place against 37 countries and 25 categories of basic steel products.” Furthermore, China – a large global steel exporter – is already subject to 28 AD and CVD orders in the U.S. and 6 pending investigations on basic steel products. This is a clear indication that the basic steel industry is not in need of additional relief from imports. The U.S. industry is performing well and the U.S. government is aggressively policing unfair trade practices.

If the U.S. were to implement restrictions on imports of basic steel products, we can certainly expect other countries to impose punitive tariffs against other sectors of the U.S. economy. For instance, agricultural associations have expressed grave concern that restricting basic steel imports will cause retaliation against U.S. agricultural exports. International markets are vital to our farming communities. Any retaliatory restrictions on American agricultural exports would be crippling to a farming economy that is already struggling with low commodity prices.

New tariffs on steel and aluminum would very likely be damaging for multiple economic sectors and millions of Americans. With the American economy humming along, the president should not take any action that could derail our economic progress.

The 15 organizations that signed this letter in opposition to new steel and aluminum tariffs are: American Gear Manufacturers Association, American Wire Producers Association, Can Manufacturers Institute, Fabricators and Manufacturers Association, International, Forging Industry Association, Industrial Fasteners Institute, National Precast Concrete Association, National Tooling and Machining Association, North American Association of Food Equipment Manufacturers, North American Die Casting Association, Precast/Prestressed Concrete Institute, Precision Machined Products Association, Precision Metalforming Association, Spring Manufacturers Institute, and Tube and Pipe Association.

(Photo via Washington State Dept. of Transportation on Flickr)