U.S. Commerce Secretary Wilbur Ross called on the Trump administration to impose a global tariff of at least 24% on all steel imports.

If approved, the tariff would rise to 53% on all steel imports from China, the largest producer and exporter of steel, and 11 other countries: Brazil, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam.

Those dozen countries also would face a quota by product on steel imports “from all other countries equal to 100% of their 2017 exports to the United States, or a quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.”

“Each of these remedies is intended to increase domestic steel production from its present 73% of capacity to approximately an 80% operating rate, the minimum rate needed for the long-term viability of the industry,” the Commerce Department stated.

Each remedy applies measures to all countries and all steel products to prevent circumvention.

Likewise, Ross recommended a tariff of at least 7.7% on all wrought and unwrought aluminum exports from all countries. The aluminum tariff would rise to 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam.

Ross’ recommendations come in the wake of Section 232 reports that found the quantities and circumstances of steel and aluminum imports “threaten to impair the national security,” as defined by Section 232 of the Trade Expansion Act of 1962.

Some experts say that rationale is unlikely to hold up under the rules of the World Trade Organization.

U.S. Steel Users Warn Against Tariff
U.S. steel users warned against the tariff, Global Trade Magazine reports.

A letter signed by the Industrial Fasteners Institute and 14 other trade associations representing over 30,000 US steel-using manufacturers warned that the entire U.S. steel supply chain “will be damaged by restrictions on steel imports.”

Placing Section 232 restrictions on basic steel imports will “adversely impact national security, the economy and the steel industry itself because it will undermine [United States steel using manufacturers’] competitiveness and our ability to make value-added products here,” the letter stated.

“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.”

The associations named in the letter represent one million U.S. steel-using jobs compared to 80,000 jobs in the domestic steel industry. The group noted that domestic steel manufacturers are reporting their best earnings in more than a decade. Additionally, there more than 160 antidumping and countervailing duties in place against 37 countries and 25 categories of basic steel products.

The associations urged President Trump 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 US economy,” according to Global Trade Magazine.

In addition to the IFI, other signatories of the letter included the American Wire Producers Association, the Forging Industry Association, the National Tooling and Machining Association, the North American Die Casting Association, the Precision Machined Products Association, and the Precision Metalforming Association.

The President is required to make a decision on the steel recommendations by April 11, 2018.

Pricing
During 2017, Chinese HRC export prices traded in a range of $415-600 per ton fob, up from $270-520 per ton fob in 2016; and rebar export prices have traded in a range of $410-580 per ton fob, up from $255-460 per ton in the same comparison, according to Metal Bulletin’s price archives.

Taiwan’s China Steel Corp. raised steel prices 1.5% for deliveries in the first quarter of 2018 to reflect rising international steel prices.

Taiwan’s largest steelmaker is increase prices by NT$327 (US$10.90) per ton. Steel plate increased NT$455 per ton and hot-rolled products increased NT$214 per ton, while hot-dipped galvanized steel rose by NT$100 per ton.

CSC’s 2018 price hike followed an increase of 5.6%, or an average of NT$1,144 per ton, in the final quarter of 2017.

The U.S. imports much of its steel — 16% — from Canada. It imports 13% from Brazil, 10% from South Korea, 9% from Mexico and 9% from Russia, according to a Department of Commerce report from December 2017.

 

Key findings of the steel report:

  • The U.S. is the world’s largest importer of steel, with imports nearly four times more than exports.
  • Six basic oxygen furnaces and four electric furnaces have closed since 2000 and employment has dropped by 35% since 1998.
  • World steelmaking capacity is 2.4 billion metric tons, up 127% from 2000, while steel demand grew at a slower rate.
  • The recent global excess capacity is 700 million tons, almost 7 times the annual total of U.S. steel consumption. China is by far the largest producer and exporter of steel, and the largest source of excess steel capacity. Their excess capacity alone exceeds the total U.S. steel-making capacity.
  • On an average month, China produces nearly as much steel as the U.S. does in a year.
  • As of February 15, 2018, the U.S. had 169 antidumping and countervailing duty orders in place on steel, of which 29 are against China, and there are 25 ongoing investigations.