Steel Products

Sharply Contrasting Views on Section 232

January 16, 2018

Emotions are running hot as the market awaits President Trump’s decision on Section 232, and whether to impose new trade restrictions on steel imports for national security reasons. Sharply contrasting comments recently from Dan DiMicco and Richard Chriss serve to bookend both sides of the issue.

DiMicco, the former CEO of Nucor and current trade advisor to President Trump, speaks for supporters of the measure when he argues that strong trade enforcement measures are needed: “The 232 is one of the few things the president could implement that would have a real chance of ending the ‘cycle’ of illegally dumped steel, etc., that has plagued our industry for decades. A cycle made infinitely worse by China’s mercantilist trade practices. It needs to be strongly punitive and lasting.”

Chriss, president of the American Institute for International Steel, (which represents the interests of foreign steel producers), summed up the sentiments of opponents:

“The national security of the United States depends on steel – both domestically produced and imported. As President Trump reviews the Section 232 report submitted by the Department of Commerce, he would do well to remember the value that quality affordable steel produced overseas provides to this country and the costs that would be incurred by restricting their import.

“Imported steel is found in defense and weapons systems and national critical infrastructure, as well as throughout the private sector. The global market enables governments and businesses to acquire steel at competitive prices, lowering federal, state and local spending and boosting the economy. Yet, while steel is critical to national security, defense accounts for only about 3 percent of the nation’s total steel consumption. In a crisis, then, domestic manufacturers could, if necessary, boost their production to meet any new requirements. Even in the event of a crisis, though, there is little reason to think that the supply of foreign steel would be cut off, since most imports come from friendly nations.

“Imposing tariffs or quotas on steel imports certainly invites retaliation by other countries. One does not need to be an expert on the early-20th century Smoot-Hawley Tariff Act to know that abandoning the principles of free trade can spark a trade war and, potentially, a global recession or worse. And economic instability is often a proximate cause for violent conflict.

“Imposing tariffs and quotas on steel imports would put both national and economic security at risk. The American Institute for International Steel urges President Trump to reject protectionism and, instead, continue the longstanding free trade policies that preserve and enhance U.S. interests,” Chriss said in a statement Jan. 16.

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