Industryweek 9355 Steel Rolls T

Steel Tariffs Supporters Urge Quick Action as Steel Mill Set to Reopen

March 8, 2018
U.S. Steel Corp. said it would restart one of two blast furnaces and the steel-making facilities at its Granite City Works in anticipation of increased demand.

Supporters of President Donald Trump’s proposed tariffs on imported steel and aluminum urged quick action on Wednesday, while a steel mill announced it would reopen in anticipation of the trade action.

U.S. Steel Corp. announced Wednesday it would restart one of two blast furnaces and the steel-making facilities at its Granite City (Ill.) Works. Driving the decision is an anticipated increase in steel demand in the United States resulting from President Trump’s proposed tariff on imported steel, the company said.

“The president’s strong leadership is needed to begin to level the playing field so companies like ours can compete, win and create jobs that support our employees and the communities in which we operate,” U.S. Steel President and CEO David Burritt said in a statement.

President Trump has announced he intends to levy a tariff of 25% on imported steel and 10% on aluminum. In mid-February the U.S. Commerce Department announced the imports “threaten to impair the national security” as defined by Section 232 of the Trade Expansion Act of 1962, as amended.  

There’s “never been a better time to put these actions into place,” said Scott Paul, president of the Alliance for American Manufacturing, said during a noon media call. Global imports of steel soared by 15% in 2017, he pointed out, while domestic production operated at approximately 75% capacity. “Unfair and predatory” actions by other countries have made the U.S. a dumping ground for excess global capacity, he said.

“The U.S. has been the sponge for the overcapacity,” Paul stated. In addition to Wednesday’s call, the AAM president also sent a letter to members of Congress, urging them to support the Section 232 trade action.

“The costs of action are negligible,” he said, while the costs of inaction are great.

While the media call addressed both steel and aluminum, steel garnered the lion’s share of attention, and China was identified as the biggest violator of trade. Joining Paul on the call were Leo Gerard, international president of the United Steelworkers; Dan DiMicco, chairman emeritus of Nucor Corp., retired Brig. Gen. John Adams; and Josh Bivens, director research for the Economic Policy Institute.

The group sought to rebut what they called “myths” by tariff opponents. For example, DiMicco dismissed the idea that implementing the tariffs would initiate a trade war. “The reality is we’ve been in it, a trade war, for over 20 years,” he said. Bivens said the outrage over the tariffs is “very high,” given the impact he said they would have. Moreover, he suggested that other protections are much stricter than those proposed by the president. 

Broad Tariffs or Targeted

The speakers were less united in how broadly the tariffs should be applied – against all countries or targeted countries – although the AAM’s Paul suggested the media was talking “semantics” rather than addressing the bigger issue of over-capacity.

That said, the United Steelworkers’ Gerard suggested that Canada should not be part of the sanctions “because they play by the rules.” Moreover, he added, the automotive industry is the biggest driver of steel movement between the two countries.

DiMicco said he supports the tariffs as originally written, acknowledging that Trump has suggested he is willing to be flexible.

Starting with a more global solution makes sense, said Paul. “I view the tariffs as a first step rather than a last word,” he said. And indeed, all the supporters noted a need to address efforts by some countries to circumvent targeted tariffs by shipping via other nations or other methods.

Tough Talk

Paul noted that companies that have come to rely on cheap steel will have to adjust. “Smart, nimble” companies will be “well-positioned to take advantage of the new reality,” he said.

DiMicco pointed out that no country or company has the legal right to dump products, and companies that rely on such “dumped, cheap steel” perhaps shouldn’t be in business.

President Trump is expected to announce the tariffs this week.

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