Commerce Department Urges Crackdown On Imported Steel And Aluminum

Feb 16, 2018
Originally published on February 17, 2018 9:11 am

The Commerce Department on Friday recommended setting strict new limits on imported steel and aluminum, saying action is needed to shore up U.S. industries vital to national security.

The recommendations, made after a 10-month investigation, are based on a seldom-used statute that aims to protect critical defense-related businesses.

"We cannot be without a steel industry," President Trump said Tuesday during a White House meeting with lawmakers. "We cannot be without an aluminum industry. And so what we're talking about is tariffs and or quotas."

Trump has until April to decide whether to act on the Commerce Department's recommendations.

Several Republican lawmakers urged Trump to move cautiously. They worry that slapping tariffs or quotas on imports could spark a trade war.

"I would just urge us to go very, very cautiously here," said Sen. Pat Toomey, R-Pa. "Invoking national security when I think it's really hard to make that case invites retaliation that could be problematic for us."

Sen. Roy Blunt, R-Mo., warned that import restrictions could also drive up prices for U.S. businesses that use steel and aluminum as well as for American consumers.

"We make aluminum and we make steel in Missouri, but we buy a lot of aluminum and we buy a lot of steel as well, from bass boats to beer cans," Blunt said.

The recommendations are also likely to face opposition from some quarters of the administration. Although Trump campaigned on a protectionist platform, he has taken only modest action so far to restrict imports. Last month he ordered tariffs on imported washing machines and solar panels.

During Trump's first year in office, the U.S. trade deficit grew by 12 percent.

The Commerce Department argues that growing imports of steel and aluminum — driven in part by overproduction in China — have so weakened America's producers that a future military mobilization could be at risk.

The department notes that employment in the aluminum industry fell by 58 percent between 2013 and 2016, while employment in the steel industry dropped 35 percent in the past 20 years. America now imports 90 percent of its primary aluminum. And only one company in the country produces the high-quality aluminum alloy used for military aerospace purposes.

The import restrictions are designed to ensure that American steel and aluminum plants operate at 80 percent of capacity, which the department considers necessary to ensure long-term viability. U.S. steel plants currently operate at about 73 percent of capacity, while aluminum plants operate at just 48 percent capacity.

The department suggests a variety of ways the United States can act to restrict imports.

For steel, the recommendations are:

  • a tariff of at least 24 percent on steel imported from any country;
  • a tariff of at least 53 percent on imports from China, Brazil, India, South Korea, Russia and seven other countries, coupled with a cap on imports from all other countries equal to their 2017 U.S. export levels; or
  • a cap on imports from all countries equal to 63 percent of their exports to the U.S. in 2017.

For aluminum:

  • a tariff of at least 7.7 percent on aluminum imported from any country;
  • a tariff of 23.6 percent on imports from China, Hong Kong, Russia, Venezuela and Vietnam, coupled with a cap on imports from all other countries equal to their 2017 U.S. export levels; or
  • a cap on imports from all countries equal to 86.7 percent of their exports to the U.S. in 2017.

The Alliance for American Manufacturing, which represents American steel manufacturers and the steelworkers union, cheered the recommendations.

"Trump is one step away from taking historic action to defend American jobs and security," said alliance President Scott Paul. "American workers are counting on President Trump to stand up for them."

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