Secretary Ross releases Section 232 reports in coordination with White House

Secretary Wilbur Ross has released reports on the U.S. Department of Commerce’s investigations into the impact on U.S. national security from imports of steel mill products and from imports of wrought and unwrought aluminum. These investigations were carried out under Section 232 of the Trade Expansion Act of 1962, as amended.

The DOC found that the quantities and circumstances of steel and aluminum imports “threaten to impair the national security,” as defined by Section 232.

The reports currently are under consideration by the president, and no final decisions have been made. The president is required to make a decision on the steel recommendations by April 11, 2018, and on the aluminum recommendations by April 19, 2018.

Key findings of the steel report are:

• The United States is the world’s largest importer of steel, with the level of imports nearly four times higher than exports.
• Six basic oxygen furnaces and four electric furnaces have closed since 2000, and employment has dropped by 35 percent since 1998.
• World steelmaking capacity is 2.4 billion metric tons, up 127 percent from 2000, while steel demand grew at a slower rate.
• The recent global excess capacity is 700 million tons, almost seven 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. Its excess capacity alone exceeds the total U.S. steelmaking capacity.
• In an average month, China produces nearly as much steel as the U.S. does in a year. For certain types of steel, such as for electrical transformers, only one U.S. producer remains.
• As of Feb. 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.

Ross has recommended to the president that he consider one of the following alternative remedies to address the problem of steel imports:

• A global tariff of at least 24 percent on all steel imports from all countries
• A tariff of at least 53 percent on all steel imports from Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey, and Vietnam, with a quota by product on steel imports from all other countries equal to 100 percent of their 2017 exports to the U.S.
• A quota on all steel products from all countries equal to 63 percent of each country’s 2017 exports to the U.S.

Each of these remedies is intended to increase domestic steel production from its present 73 percent of capacity to about an 80 percent operating rate, the minimum rate needed for the long-term viability of the industry. Each remedy applies measures to all countries and all steel products to prevent circumvention.The tariffs and quotas would be in addition to any duties already in place.

The report recommends that a process be put in place to allow the secretary to grant requests from U.S. companies to exclude specific products if the U.S. lacks sufficient domestic capacity or for national security considerations. Any exclusions granted could result in changed tariffs or quotas for the remaining products to maintain the overall effect.