WASHINGTON President Donald Trump moved on
Thursday against China and other exporters of cheap steel into
the U.S. market, launching a federal investigation to determine
whether foreign-made steel threatens U.S. steelmakers and
Winning praise from U.S. companies that are constantly
fighting with foreign competitors, Trump invoked a rarely-used
trade law that raises the possibility of new tariffs. The action
triggered a rally in U.S. steel stocks.
At a White House ceremony where he was surrounded by U.S.
steel executives, Trump signed a memorandum ordering the U.S.
Commerce Department to probe the impact of steel imports on the
U.S. defense industrial base.
"Steel is critical to both our economy and our military.
This is not an area where we can afford to become dependent on
foreign countries," said Trump, a Republican.
The global steel market is in surplus. China is the largest
national producer and makes far more steel than it consumes. To
find buyers for its excess output, China sells steel cheap
overseas, often undercutting domestic producers.
“Everything they export is dumping,” said Derek Scissors,
Asia economist at the American Enterprise Institute, a
Washington think tank.
U.S. Commerce Secretary Wilbur Ross cast the decision to
initiate the probe as a response to Chinese exports of steel
into the United States reaching the point where they now account
for 26 percent of the U.S. market.
Chinese exports have risen "despite repeated Chinese claims
that they were going to reduce their steel capacity," Ross said.
He said if the U.S. steel industry is deemed to be suffering
from too much steel imports, he will recommend retaliatory steps
that could include tariffs. Trump ordered a probe under Section
232 of the Trade Expansion Act of 1962, which lets the president
impose restrictions on imports for reasons of national security.
News of the move triggered a rally for steel stocks,
including Steel Dynamics Inc, AK Steel, U.S.
Steel, Nucor, Cliffs Natural Resources,
and Allegheny Technologies.
The United States has nearly 100 plants that make millions
of tons of steel annually. The U.S. government attempts to
shield them from cheap foreign steel chiefly by filing
anti-dumping actions with the World Trade Organization, but the
Trump administration said these have had little impact.
"The artificially low prices caused by excess capacity and
unfairly traded imports suppress profits in the American steel
industry," the administration said in a statement.
The Defense Department's annual steel requirements comprise
less than 0.3 percent of the industry’s output by weight.
“There is no doubt that steel plays a role in our national
security and the manufacturing of U.S. weapons systems,” said
Jeff Bialos, a partner at law firm Eversheds Sutherland, who has
worked on steel trade cases in the past.
"But the Department of Defense only consumes a small portion
of domestic steel output, and this has decreased over the past
decade as composites technology has advanced,” Bialos said.
One of the military’s largest consumers of steel are U.S.
Navy shipbuilders Huntington Ingalls Industries and
Lockheed Martin Corp.
Scissors questioned the administration's invoking of Section
232. He said the United States has other ways to take on China
over steel trade issues, other than invoking national security.
“Talking about it as a national security issue - I don’t
think it’s necessary and I don’t think it’s justified,” he said.
In October 2001, a Commerce Department investigation found
"no probative evidence" that imports of iron ore and
semi-finished steel threaten to impair U.S. national security.
Use of Section 232 could send another political message. “It
does say we are not the same kind of administration as previous
administrations,” he added.
The move is another step in Trump's "America First" policies
in which he has tried to boost U.S. manufacturers and preserve
American jobs. Trump won many votes in industrial Midwestern
states like Michigan and Pennsylvania with a pledge to boost
manufacturing and crack down on Chinese trade practices.
Democrats were cautious about Trump's step.
“While today’s executive order to investigate potential
national security vulnerabilities due to steel imports is a step
forward, I will hold the administration accountable on its
promises to fight for working Americans," said Connecticut
Representative Rosa DeLauro in a statement.
U.S. Steel said China and other countries that have exported
steel to the United States have cost U.S. manufacturing tens of
thousands of jobs.
“For too long, China and other nations have been conducting
economic warfare against the American steel industry by
subsidizing their steel industries, distorting global markets,
and dumping excess steel into the United States. The effects
have been staggering," a U.S. Steel statement said.
The Commerce Department will have 270 days to complete the
probe. Ross, a former steel executive, said he expected it to be
done much sooner.
(Additional reporting by Jeff Mason in Washington; and Luciana
Lopez and Caroline Valetkevitch in New York)