Trade Cases

Trade Groups, Mills Applaud Section 232 Recommendations

Written by Sandy Williams

Reaction by American trade associations and producers to Friday’s Commerce Department recommendations on Section 232 was mostly favorable and encouraged swift action.

The Steel Manufacturers Association applauded the recommendations laid out by Secretary Wilbur Ross in the Section 232 steel report: “Secretary Ross has accurately concluded that steel imports threaten to impair our national security from both a defense and critical industry standpoint,” said SMA President Philip Bell.” The secretary has laid out options that have the potential to be meaningful and effective to address the threat the industry faces in light of global excess capacity and relentless steel imports.”

The Alliance for American Manufacturing calls for immediate “broad, robust and comprehensive” action. “Any exclusions deserve appropriate scrutiny,” said AAM President Scott Paul. “Otherwise, the Washington swamp will be filled with importers trying to undermine American jobs.”

The United Steelworkers were encouraged by the report, but said the fight against unfair and illegal trade and global capacity is far from over. Said USW International President Leo Gerard, “These recommendations have the potential to focus on the bad actors in the world that historically and systemically cheat in international trade. We applaud that approach.” Gerard urged quick and comprehensive action by the president.

Nucor CEO John Ferriola, a strong supporter of Section 232 action, said in a statement, “We are very encouraged by the recommendations Secretary Ross has provided the president to deal with the ongoing problem of unfairly traded steel imports. We urge the president to move quickly to review these recommendations. We stand ready to assist the administration in evaluating which recommendations will have the greatest impact in stopping the flow of unfairly traded imports so that we can ensure our nation maintains a healthy and sustainable steel industry for its national defense and economic security.”

AK Steel CEO Roger Newport also commended the Commerce Department on its recommendations and urged prompt action. “We agree that the ongoing high level of imports is a threat to the national security of our country,” said Newport. “This is particularly true for electrical steels, which are used to manufacture power generation, transmission and distribution transformers that serve as the backbone of our nation’s electric power grid. It is vital that action be extended downstream to electrical steel intensive products necessary for our electrical grid, including laminations, cores, core assemblies and transformers in order to prevent circumvention of the Section 232 remedy.”

U.S. Steel issued a statement agreeing with the findings by Secretary Ross. “We appreciate and agree with the compelling case presented by Secretary Ross and the Commerce Department in the Section 232 national security investigation report on steel imports. We urge President Trump to take prompt, aggressive, and lasting action targeting the steel imports threatening our national and economic security and impacting our communities, employees and their families whose futures are at stake.”

Negative Impact Potential

Not everyone was enthusiastically in support of new tariffs and quotas.

Business Roundtable, a national organization representing CEOs of America’s leading companies, warned the administration of potential retaliation. “Business Roundtable is concerned that acting on the Commerce Department’s recommendations to use Section 232 to restrict steel and aluminum imports will result in foreign retaliation against U.S. exporters and harm the U.S. economy. Using Section 232 could embolden other countries to use ‘national security’ to restrict U.S. goods and services entering their markets. We urge the president not to take Section 232 action and, instead, develop a different approach to address global overcapacity of steel and aluminum that does not put the U.S. economy at such high risk.”

The National Tooling and Machining Association and the Precision Metalforming Association released a joint statement rejecting the recommendations. Roy Hardy, president of PMA, and Dave Tilstone, president of NTM, said, “The recommendations by the Commerce Department would devastate downstream U.S. steel consuming manufacturers who employ 6.5 million Americans, compared to the 80,000 employed by the domestic steel industry. If these tariffs are imposed, the U.S. will become an island of high steel prices resulting in our customers simply importing the finished part and threatening thousands of jobs across the United States. The last time the U.S. imposed steel tariffs in 2002, more than 200,000 American jobs were lost because of high steel prices due in large part to the tariffs. We urge President Trump, who campaigned to protect U.S. manufacturing jobs, to reject these recommendations by the Commerce Department to avoid devastating the U.S. manufacturing sector.”

Cowen analyst Novid Rassouli suggests that option two or three of the steel recommendations is most likely to be implemented. “While all three are positive for both [the steel and aluminum] industries, we think options two and three are the most likely outcomes, as the first option – utilizing a blanket tariff – is too broad, in our view,” Rassouli wrote in a research note Friday. “There is a higher level of precision needed than a blanket tariff because depending on the product spread, it could for instance knock out one product, and do little to nothing for another.”

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