Steel Products Prices North America

Should U.S. Penalize Countries with High Rate of Exports?

Written by John Packard

Last week, Steel Market Update (SMU) completed our mid-July flat rolled market trends analysis. We invited 650 steel executives to participate. Of those responding, 48 percent were service centers, 41 percent were manufacturing companies, and 8 percent were trading companies, with steel mills and toll processors accounting for 4 percent each.

One of the questions asked was, “Do you think the U.S. government should penalize countries that have a high rate of exports to the U.S. in the name of national security?”

About 30 percent of the respondents said yes, while the majority, 70 percent, replied no.

What Our Respondents Had to Say

Our respondents had plenty to say, and below is a sampling of the more than 25 comments we received on this one question:

“We all need to learn how to compete. Most mills are making far too much money with the duties that are currently in place, so they don’t need more help. Section 232 should be used for what it is intended for and not this.” Manufacturing company

“I disagree with the word penalize. I think every administration should have the goal to balance trade by eliminating currency manipulation. Then industries can stand on their own two feet.” Service center

“I think we should always put the national security of this country first. I am all for “Made in the USA.” But we have to be competitive on a global market. The steel mills need to help us be competitive instead of pricing us out of the market because they don’t know how to make money any other way except through price increases. In our company, we have to figure out how to save money through process and product value analysis and to do more with less. The mills have a privileged mentality. They are being dumped on, so the government should help them. Well guess what, every other industry is being dumped on, as well, but we are on our own.” Manufacturing company

“No, but it seems to be the only tool we have, or at least the only expedient thing that can be done. It would be much better to focus on the major offenders (China). The issue is finding a way to focus on China and close the loopholes that allow China to play global ‘Wack a Mole.’” Manufacturing company

“I have a tough time understanding how some steel studs and duct work in a strip mall in Phoenix is a national security risk. I see a national security risk with Saudi Arabia and North Korea, but not with CR or GI coils.” Trading company

“One of the greatest things about being American is living in the USA with our standard of life, which includes American purchasing power (i.e. free trade gives us plenty of opportunity to acquire low cost / plentiful goods). If the unemployment rate was soaring, I could understand stepping in, but it’s at a historically low level. If all of the mills were losing money or even most of the mills were losing money, I could understand stepping in, but several of the mills, especially the minimills, have shown they are not only strong enough to survive, but at these price levels record huge profits (i.e. Nucor Q1 best since 2008???).” Manufacturing company

“Trump is a fool. Steel imports have nothing to do with national defense. He just wants to help out steel mills while ignoring all the manufacturing below them that really matters.” Trading company

“Penalizing countries simply because they have high rates of steel exports to the U.S. is an interesting but irrelevant reason. Are those exports being dumped here, are they being subsidized, are the products in short supply, do the U.S. mills not want to make them and in turn priced themselves out? Have the U.S. mills allowed the import spread to widen beyond all reason? All those would be good questions to explore, but penalizing on the sole basis of the rate of exports to the U.S. is simply an irrational measurement.” Manufacturing company

“Not in the name of national security. I think that is a load of bunk. Certainly, we need imports, but we need to protect our markets at the same time.” Service center

“I do not believe there is a true “national security threat.” The only threat is to the bottom line of our steel mills and to our economy in general.” HVAC Wholesaler

“Only if there is a huge price gap! Domestic mills can only take care of 70 percent of demand in many products, so imports are needed in several categories to fill the holes.” Service center

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