Latest order shows Trump looking out for American steel
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Last week, the question was raised in this section of The Hill whether or not the president still had the backs of American steelmakers. This week, he answered when he had Secretary of Commerce Wilbur Ross announce Thursday the deployment of a seldom-used weapon in the battle against imported steel.

As such, President Trump made friends again with steel executives, some of whom were invited to the White House for the briefing. Give the president a high grade for timing — several steel industry leaders had been wondering lately if the president was wavering in his support for the industry. 

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Last week, President Trump said he did not consider China a currency manipulator — something the U.S. steel industry has long lobbied for. He also tweeted that China might get a better trade deal if the country helped ease tension with North Korea. This raised more than a few eyebrows within the U.S. steelmaking industry —reflecting concerns that a better trade deal for China might come at the expense of American steel. 

 

Enter Section 232, part of Trade Expansion Act of 1962 — arguably one of the most powerful trade-restriction arrows in the quiver, but not without its limitations.

Section 232 investigations are used to determine the impact of imports on national security. Going this route bypasses most other trade-remedy actions that require an industry to demonstrate that it has been injured by imports. But like most trade investigations, Section 232s can take time, are seldom slam dunks and do not produce overnight results.

Typically, the Department of Commerce conducts the Section 232 investigation and then makes recommendations to the president within 270 days of receiving an application. Trump would then have 90 days to decide if he agrees and will adjust imports accordingly.

Secretary Ross said at the briefing he would report back much sooner than 270 days because so much work has already been done with other steel-related anti-dumping and countervailing duty trade investigations. 

In 2001, Commerce used Section 232 to investigate the effect of imports of iron ore and semi-finished steel on national security. But in the end — even after factoring in the attacks of 9/11 — Commerce recommended no presidential action.

But Ross, a former steel industry investor and executive, has promised a more proactive Commerce Department than perhaps ever before. He is on record as saying that he plans to use the department's ability to self-initiate anti-dumping and countervailing duty investigations to send a message to foreign manufacturers, a stance that U.S. steel industry executives have long encouraged.

Commerce initiated this latest case based on Trump's decision to increase military spending, according to Ross. The report will focus on whether the American steel industry has the resources, capacity and skilled workers needed to meet the country's defense needs if it had to ramp up, he said.

 

That element of the investigation might prove problematic. In recent years, the issue of using U.S.-made steel for defense and national security reasons has been dealt with at the federal agency procurement level. In some cases, it’s just impossible to avoid buying foreign steel because certain products and grades are not produced in the U.S., or supply is limited.

In 2009, for instance, when the U.S. military was involved in wars in Iraq and Afghanistan, domestic steel demand strengthened as supply tightened. At the time, the Department of Defense (DOD) gave steel plate finished in the U.S. the same status as plate fully produced in the U.S.

This meant Russian and Ukraine steel slab or plate, or such products from other countries, could come into the U.S. and be further processed here. The optics were lousy: Russian steel in American tanks and armored Humvees.

The House Steel Caucus wasn’t pleased: “Buying steel made in America ensures our troops are protected with armor that's not only well-built, but absolutely flawless," Caucus Chairman Rep. Tim Murphy (R-Pa.) said at the time. 

By 2012, the DOD restored its mandate that required armor steel plate used in its military vehicles to be melted and finished in the U.S.

Now, the Commerce Department will investigate U.S. steel production needed for the country's projected national security requirements, the industry's capacity, human and material resources, imports, the impact of foreign competition on certain industries and other points.

American steelmakers have been loving the attention from this administration, but with such attention comes greater scrutiny. The old saying, "Be careful what you wish for," comes to mind.

 

Joe Innace is the content director of Metals/Americas for S&P Global Platts. He's also an award-winning business writer, recognized as Steel Journalist of 2015 by the World Steel Association.


The views expressed by contributors are their own and not the views of The Hill.