Unions, Steel Mill Companies Endorse 232, Steel, Aluminum Buyers Pan Them

Philip Bell, president of the Steel Manufacturers Association, said, "In combination with targeted AD and CVD orders, the Section 232 measures have helped to restore balance to the U.S. market and to create the conditions necessary for the industry to begin recovering and reinvesting. Following Section 232 implementation, imports fell from 34.7 million metric tons in 2017 to 25.4 million tons in 2019." He said that at the end of 2019, steel prices were lower than they had been in 2017, before the 25% tariffs began.

Christopher Bedell general manager, corporate and legal affairs at Nucor Corporation, said that Section 232 has not been as important in the steel industry's return to profitability as trade remedies were. "The series of antidumping and countervailing duty orders issued in 2016 and 2017 was the most important driver of the industry’s improvement since then," he said. Still, he said, "There is simply no correlation between any U.S. trade action and inflation, and there is no evidence that removing tariffs could play any role in resolving it.

"Removing the measures too soon, however, would derail the Section 232 program’s national security objectives. Recent gains must be sustained for the long-term if they are to be durable. Foreign governments – U.S. allies included – have shown no signs of allowing market forces to dictate outcomes in this industry."

Patrick Bloom, vice president of government relations at Cleveland-Cliffs, the largest producer of flat-rolled steel in the U.S., said the goal to bring more manufacturing to the U.S. and fight climate change, "and seeks to navigate globally destabilizing geopolitical conflicts, the maintenance and the strengthening of the Steel Section 232 program remains a national security imperative."

American Iron and Steel Institute CEO Kevin Dempsey expressed concern that the move to tariff rate quotas for most allies, and the lifting of Section 232 tariffs on Canada and Mexico are eroding the protection the tariffs provided. He said import penetration was 27% in 2017 and from January-May this year, it was 24%.

But purchasers of steel and aluminum said the tariffs and quotas have either driven up costs or lengthened waits for domestic metal, or both.

Aluminum Association CEO Charles Johnson said, "With respect to Section 232 tariffs, the association and its members did not request relief under this tool, which chiefly aimed to support U.S.-based primary aluminum producers. And, while the tariffs have provided some level of stability for aluminum firms up and down the value chain, they have not addressed the fundamental and ever-evolving distortions resulting from China’s rampant use of industrial subsidies in the aluminum sector. Any future actions to alter or remove the tariffs should be undertaken carefully with a stepped approach, and in a way that minimally disrupts the US market.”

CAMMU Executive Director Paul Nathanson testified that a recent survey of more than 70 CAMMU member companies found that 84% of respondents are having difficulty sourcing steel, and 76% are having trouble sourcing aluminum. The survey showed that 87% of respondents are experiencing delays in receiving steel supplies, and 84% are experiencing delays in aluminum supplies.

“These ongoing tariffs, which are now more than four years old, have severely damaged U.S. manufacturing global competitiveness and an independent review of their impact is long overdue,” said Scott Buehrer, President of B. Walter & Co. in Wabash, Ind., a CAMMU member.

Precision Metalforming Association President David Klotz said, "What matters most to U.S. manufacturers is the price difference between what they pay for steel versus what their global competitors are paying. Simply put, the Section 232 tariffs have placed U.S. manufacturers at a significant disadvantage. If this situation is not resolved, the steel shortages and prices in the U.S. will force some manufacturers to leave the U.S. for other countries where steel is less expensive and turn foreign-made steel into products to ship back to the U.S. tariff free. "

American Concrete Pipe Association President Steven Hawkins said his members always bought U.S. steel because they primarily do government projects, but that Section 232 has led to eight to 12-week lead times for orders.

"Concrete pipe producers cannot currently promise delivery dates of pipe or bridges because they are unsure if or when steel reinforcing products will arrive. This is delaying the start date and completion date of infrastructure projects," he said.

The Beer Institute explained that because of the way commodity contracts are pegged to regional benchmarks, even breweries that are buying recycled aluminum or aluminum smelted in the U.S. are paying the 10% tariff, because S&P Global Platts has set the Midwest Premium Duty Paid price as the benchmark. "Since March 2018, the beverage industry has paid more than $1.4 billion in tariffs on cans and cansheet. Only 8 percent of that amount – $111 million – has gone to the U.S. Treasury," the Institute testified.

Can Manufacturers Institute President Robert Budway said even with 25% tariffs on tin mill steel, U.S. production as a proportion of domestic demand has fallen from 55% to 49% after four years of Section 232.

Dan Walker, managing director of the Industrial Fasteners Institute, a trade association which represents approximately 85% of fastener production capacity in North America, said "According to a 2019 study authored by economists from the New York Federal Reserve, Princeton University, and Columbia University, the Section 232 steel and aluminum tariffs, in aggregate, cost U.S. companies and consumers the equivalent of $3 billion a month in additional taxes. It also found that 'the entire incidence of the tariffs fell on domestic consumers…with no impact so far on the prices received by foreign exporters.'"

He said some fastener manufacturers have received exclusions, but "the process can take so long to complete that the company who is granted the exclusion cannot get their refunds processed before the Customs process requires their accounts to be liquidated. In one example, an IFI member lost out on $4.5 million it was owed in refunds due to a granted exclusion because of the processing delays."