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Steel, manufacturing unfazed by trade war threat

Jul 07, 2017 | 03:27 PM | Michael Cowden


CHICAGO — Steel and manufacturing interests in the United States have doubled down on their support of Section 232 investigations into steel and aluminum imports despite the threat that the measures could spark a trade war.

Some also urged President Donald Trump's administration to act quickly on the issue amid fears that a remedy in the steel case could be watered down due to yet more delays.

A decision in the steel 232 was initially expected by the end of June but has since been postponed until after the Group of 20 (G20) meeting in Germany on July 7 and 8.

Swift action is required because steel imports hit a 29-month high in June, Philip K. Bell, president of the Steel Manufacturers Association, said in a phone call with AMM on Friday. “Our administration needs to take 232 action now. And the rhetoric should tone down because the US is only doing what any country would do to support its domestic steel industry.”

Bell pressed the administration for a broad-based solution to curb imports. “Whatever remedy comes out of the 232 investigation, it has to apply to virtually every country and every product line to accomplish any meaningful results,” he said.

The Alliance for American Manufacturing (AAM) echoed the sentiment. "While President Trump is abroad, it’s important to note that his most important audience is back home. And it won’t settle for the status quo on manufacturing jobs,” AAM president Scott Paul said in a statement on July 7. "That’s what makes the administration’s upcoming decisions on trade so important. Will President Trump chart a new course and boost the steel and aluminum industries, or will he embrace the status quo?"

Such comments come as mainstream media outlets, including the Washington Post and the Financial Times, have warned that a unilateral imposition of tariffs on foreign steel by the US could spark a trade war.

The Financial Times said the European Union was considering hammering US exports of whiskey, orange juice and dairy products with tariffs.

The threat came as German Chancellor Angela Merkel acknowledged the tensions between the United States and Europe at the G20 meeting. “The discussions are very difficult. I don’t want to talk around that,” the Washington Post quoted her as saying.

The G20 summit has seen free traders in the European Union and elsewhere collide with Trump's “fair trade” approach, which some contend is really protectionism.

Meanwhile, on the home front Washington sources contacted by AMM said Secretary of Defense James Mattis has ordered the Defense Logistics Agency, the procurement wing of the Defense Department, to conduct an assessment of the importance of the steel industry to national defense within 60 days.

The move, if it has happened, would be unusual in that it would appear to duplicate work being done by the Commerce Department’s Bureau of Industry and Security (BIS) as part of the Section 232 probe.

A Commerce spokesman referred questions to the Pentagon regarding whether Defense might be conducting a parallel or rival review. A Defense spokesman did not confirm or deny whether the department might be engaged in its own assessment of the impact of imports on national security.

“The Department of Defense is engaged with the Department of Commerce and our interagency colleagues on the steel import review effort,” he said in a July 7 e-mail to AMM.

Washington sources contacted by AMM floated several theories regarding why Commerce and Defense might be working on similar but separate reports.

Defense might be preparing a separate report to support Commerce if the latter’s findings are challenged in US courts or at the World Trade Organization (WTO), and to shore up any shortfalls in the Commerce report, they said. Alternatively, it’s possible that a free-trade faction within the White House aims to use the Defense report to delay a rival, nationalist faction from rolling out draconian barriers to imports.

Commerce has said it is considering tariffs, quotas or a combination of the two to reduce imports of steel and aluminum.

The main impact on the steel market from such a rift, if it exists, is that Commerce’s findings are unlikely to be disseminate early in the coming week, one Washington source said. And even if they are, they could include broad language about imports posing a threat to national security without detailing any potential remedy to curb them, he said.

Michael Cowden
mcowden@amm.com