Metals association lobbies Congress to neutralize new bill it says will weaken Section 232 tariffs

April 2019 - The Alliance for American Manufacturing is urging members of Congress to oppose the Bicameral Congressional Trade Authority Act of 2019 (S. 287/H.R. 940), introduced by U.S. Sen. Patrick Toomey (R-Pennsylvania) and U.S. Rep. Mike Gallagher (R-Wisconsin).

In a letter submitted Feb. 12, Alliance for American Manufacturing President Scott Paul says that “rather than weakening available national security trade tools, Congress should reaffirm its support for a fair and level playing field and urge other countries in the strongest possible terms to confront their own, and China’s, protectionism.”

The Toomey-Gallagher bill “abandons” Congress’ commitment to trade enforcement, Paul’s letter states. He claims the legislation “dangerously weakens” Section 232 of the Trade Expansion Act of 1962, implemented in March 2018, “by effectively eliminating an important national security trade tool for use by the current or any future president. It also threatens to repeal current Section 232 actions on steel and aluminum imports that are creating thousands of jobs, spurring massive investments and restoring U.S. productive capacity.”

The Section 232 tariffs were applied to imports to ensure that domestic output of materials or products vital to U.S. national security can resist market distortions via excess imports.

Surge mode

The bill requires Congress to pass an approval resolution within 60 days for any Section 232 action to take effect, which would delay a national security trade action. In the passage of two months between the announcement of a Section 232 action and congressional approval, the domestic industry would face a surge of imports as foreign producers and importers race to stockpile product on U.S. shores before tariffs take effect, according to Paul.

“This unrealistic process would only make matters worse and further deteriorate domestic production capabilities already determined to be at risk. The legislative process is not well suited to reacting to national security concerns with agility and speed.”

By narrowing the definition of national security, the Toomey-Gallagher bill “fails to recognize that a functioning commercial market is necessary for domestic producers to be able to meet the irregular but critical demands of our national defense,” Paul’s letter states.

The legislation also seeks to shift Section 232 investigation responsibilities from the Department of Commerce to the Pentagon, “a seemingly innocuous change that similarly diminishes the importance of properly functioning commercial markets.” Meanwhile, DOD, often under pressure to cut costs without regard for the health of the industrial base that supports military aims, does not have the same expertise as Commerce does to assess the health of domestic producers and the impact of imports.

According to numerous Commerce trade investigations, 10 major U.S. steel  mills closed since 2000. “At the peak of the import crisis that started in 2015, nearly 19,000 steelworkers had lost their jobs. Similarly, the domestic aluminum sector saw production plummet as the number of domestic smelters shrank from 23 in 2000 to just five in 2017.”

The Section 232 tariffs have spurred investment strategies among domestic aluminum and steel companies valued at $18 billion, pushed domestic production rates higher and created thousands of jobs, which Paul says support national security capabilities.

“Passage of the Toomey-Gallagher bill would put an immediate chill on these investments and disrupt hiring plans—or worse, trigger layoffs,” the letter states.

‘Bad actors’

AAM also views the Toomey-Gallagher bill as rules that allow “bad actors like China and Russia off the hook after flooding the global market” with excess supply. “Rather than confronting China’s market-distorting practices, this bill seeks to capitulate to them.”

If retroactive congressional approval were not granted for the steel and aluminum tariffs already in place, “it would send an alarming signal to China and others who abuse subsidies and state ownership that there are no consequences for wiping out our industrial sectors deemed at risk and vital to U.S. national security.”

The alliance calls on Congress to oppose the Toomey-Gallagher bill, saying Congress has rarely used its own authority to initiate trade cases and has played political football with trade adjustment assistance. “This legislation would only further erode voters’ faith in Congress to execute on trade policy as it seeks to weaken available trade tools.” MM