National interest

By Corinna Petry

May 2017 - The new administration has been listening carefully to the executive leadership of the American steel and aluminum industries. It doesn’t hurt that Commerce Secretary Wilbur Ross is a clear champion of steel, having consolidated aging assets throughout the U.S. in the early 2000s through International Steel Group and then selling ISG to ArcelorMittal. 

President Trump launched two investigations in April, one for each of the two metals, under Section 232 of the Trade Expansion Act of 1962. Commerce will study the effect imports have on economic and national security. 

Aluminum, according to an April 27 White House memo, is deemed “critical for U.S. national defense, from Army ground vehicles and Air Force jets to Navy warships.” The questions that will be asked in each probe are whether imported materials impair the ability of the domestic industry to meet America’s national defense needs; have any substantial effects on employment or government revenue; weaken the U.S. economy; or impair national security. A report will be due in 270 days and then the president has 90 days to determine what action should be taken to remedy any harm. 

“Unfair trade practices are hurting U.S. aluminum producers and fabricators,” says Aluminum Association President and CEO Heidi Brock. 

Twenty-five antidumping and countervailing duty investigations on steel imports are pending and there are 150 duties already in effect on imported steel products whose volumes and below-market prices were deemed to have caused injury to U.S. producers.

“Times of crisis call for extraordinary measures,” says American Iron and Steel Institute President and CEO Thomas J. Gibson. “Massive global steel overcapacity has resulted in record levels of dumped and subsidized foreign steel coming into the U.S. and the loss of nearly 14,000 steel jobs.”

Both groups voiced a commitment to work with Commerce on these probes.

Ross, in an April 20 press briefing on the steel investigation, noted that “steel is an important factor in our infrastructure as it relates to national defense. We’re building up aircraft, we’re building up our fleet, we’re building more tanks. If it turned out [manufacturers] had to ramp up, are we getting to the point where the [domestic] industry couldn’t be able to deal with that?”

Of eight U.S.-based aluminum smelters at the beginning of 2016, seven either shut down, reduced production or are idled. From 2012 to 2015, imports of semi-fabricated aluminum from China grew by 183 percent, according to the White House memo. Further, imports of aluminum foil from China grew from nonexistent in 2004 to a 22 percent U.S. market share today.

Probably one of the crucial statements made by the administration, one which U.S. industry participants and observers will likely agree upon, is that “efforts to work with other countries to reduce excess global overcapacity have not succeeded.”

The upshot is suppressed profits for domestic producers. 

Next month, this column will describe the reaction from exporters and their U.S. customer base regarding the launching of twin Section 232 probes in light of the national security argument. MM

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