Steel Products

Trade Associations State Case Against Section 232

Written by Sandy Williams

Fifteen trade associations, representing more than 30,000 U.S. steel-using manufacturers and employing one million American workers, sent a letter to President Trump and other senior trade officials last night in advance of the meeting between the administration and legislators regarding Section 232.

The letter warns that restrictions on basic steel imports will “adversely impact national security, the economy and the steel industry itself because it will undermine [U.S. steel-using manufacturers’] competitiveness and our ability to make value-added products here.” 

The letter and signatories follow:

Dear Mr. President:

We respectfully submit this letter on behalf of the undersigned 15 associations in connection with the Section 232 investigation of steel imports and their impact on national security.

These associations represent a variety of American industries that buy steel to manufacture many thousands of value-added downstream steel products, which are essential to the national security and prosperity of the United States. Our members make everything from steel wire used in control cables and fasteners for military aircraft, to fabricated steel plate doors and floors for military vehicles, and many types of machined and formed steel products for defense and civilian applications that enhance our security and improve our country’s wellbeing. Many of these products are vital to transportation and water infrastructure. Collectively, the members of our associations represent more than 1,000,000 jobs at more than 30,000 factories and plants throughout the United States – compared with about 80,000 jobs in the U.S. basic steel industry.

Our member companies source the majority of their steel requirements from the domestic steel industry, but we also require continuing access to global supply chains. This is necessary as there are many types of steel products that are simply not available from domestic steel mills. Restrictions on basic steel imports will actually adversely impact national security, the economy, and the steel industry itself because it will undermine our competitiveness and limit our ability to make value-added products here. In that event, these products will be made elsewhere, resulting in lost business and jobs for our members and reduced purchases from the domestic basic steel industry. Everyone in the U.S. steel supply chain will be damaged by restrictions on steel imports.

We also note that, despite the rhetoric from the domestic basic steel industry, the United States has undertaken widespread actions against unfairly traded steel imports. At present, there are more than 160 antidumping (AD) and countervailing duty (CVD) orders in place against 37 countries and 25 categories of basic steel products.

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China alone – which is identified as the major problem in the global steel sector because of its enormous overcapacity – is subject to 28 AD and CVD orders in the United States and 6 pending AD and CVD investigations on basic steel products. These include flat-rolled, long, and tubular steel products, such as plate, hot-rolled, cold-rolled, and corrosion-resistant sheet, wire rod, concrete reinforcing bar, and standard, line, and seamless pipe, as well as various stainless steel products. As a result, China is no longer a significant exporter of basic steel products to the United States, and with these orders in place, it is unlikely to become one again for many years. 

The U.S. basic steel industry is also experiencing impressive financial results. In 2017, 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. Other U.S. steel mills had similar results. In addition, with the recent tax reform, these companies are likely to see soaring profits in the coming year. An infrastructure bill will further greatly benefit this sector. This is not an industry that warrants extraordinary and unprecedented relief from imports.

Finally, we are also very concerned about the unintended and disastrous consequences which Section 232 restrictions on imports of basic steel products would have on other sectors of the U.S. economy. As the letter of July 12, 2017, from former chairs of the President’s Council of Economic Advisers points out, the cost of retaliation by our trading partners – many of them close and invaluable allies – could exceed any benefit that restrictions on steel imports under Section 232 might provide. Further, representatives of 18 agricultural associations and federations expressed concern in their letter of July 11, 2017, that barriers against steel imports could trigger retaliation against American exports of agricultural products with disastrous consequences for that essential sector of the U.S. economy.

Ultimately, a tit-for-tat cycle of trade restrictions and retaliation will undermine the global economic system and damage the long-term security and prosperity of the United States.

Accordingly, Mr. President, we respectfully urge you to avoid any decision which would do harm to so many downstream steel manufacturing companies and other steel consumers, our employees, and our customers, with little or no additional protection to the basic steel industry, while at the same time causing great economic harm to numerous other sectors of the U.S. economy.

On behalf of our member companies, we thank you for your consideration.

Kimberly Korbel, Executive Director
American Wire Producers Association

American Gear Manufacturers 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
Tube and Pipe Association

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