President Donald J. Trump has completed his first 100 days in office and thus far has signed into law 28 pieces of legislation.
While Trump has made traction in some respects, the fate of the nation’s steel industry was still up in the air — that is, until Trump signed a Presidential Memorandum in late April calling on Department of Commerce Secretary Wilbur Ross to prioritize an investigation into the effects of steel imports on U.S. national security.
Here are three things you should know about this directive and what it could mean for the nation’s steel industry.
The Trade Expansion Act of 1962
The investigation is being conducted under Section 232 of the Trade Expansion Act of 1962. According to the Department of Commerce, Ross is tasked with determining the following:
- “Whether steel imports cause American workers to lose jobs needed to meet security requirements of the domestic steel industry;
- Any negative effects of steel imports on government revenue; and
- Any harm steel imports cause to the economic welfare of the U.S.”
The Current Situation
Despite an existing steel industry, steel imports saw a 19.6% year-over-year increase in February, and, currently, imported steel accounts for 26% of the U.S. market share, according to the Department of Commerce.
Further, the U.S. steel industry is only operating at 71% capacity, and jobs in the industry has continued to take a steady hit.
“When workers have been laid off, as something like 30% of this industry has over time, you lose skills,” said Ross in a CNBC interview late April. “You need highly skilled workers to make the particular products that are essential for our national defense.”
The country’s national defense is what lies at the crux of Trump’s mandate to the department’s investigation, according to Ross.
“As you know, the president has requested a large increase in the supplemental budget for defense and plans a further big increase next year,” said Ross. “That is going to inevitably cause the need for more steel, and more specifically, for a very particular kind of very complicated steel alloys… Since their needs are very, very specific, there are some products where there are only two suppliers to the military, neither of which are U.S. owned. That is a very dangerous circumstance.”
On the Horizon
While the country has no tariffs on steel, the U.S. has had to impose anti-dumping/countervailing duties in more than 150 cases, with 13 more currently pending, according to the Department of Commerce.
If the department’s investigation concludes that steel imports threaten to impair national security, several actions could be taken by the Trump administration, including the implementation of tariffs.
By law, the department has 270 days to complete its investigation and submit its findings.
“We don’t contemplate absolutely prohibiting the import of steel,” said Ross. “What we’re trying to do is to change the arithmetic so that the dumping practices are not as effective as they have been.”