The U.S. economy has done well post-Covid. Demand for steel is an example. Despite Section 232 global steel tariffs and quotas on European raw steel, imports of steel slabs and steel products like steel rebar are up. Problem is, it is eating into domestic producer market share and companies are closing shop.
Steel import permit applications for January totaled 2,922,000 net tons (NT), a 23.4% increase in import interest from the 2,369,000 permit tons recorded in December and a 36.8% increase from the December final imports total of 2,135,000. These may not be final volumes, but are based on steel importers putting in requests to purchase.
Import permit tonnage for finished steel in January was 2,227,000, up 22.2% from the actual imports total of 1,822,000 in December. The estimated finished steel import market share for the U.S. producer in January was 25%, based on the Commerce Department’s most recent Steel Import Monitoring and Analysis data released in early February.
The biggest volume jumps month-over-month for January-December trade include steel rebar (up 178%), heavy structural shapes (up 174%), semi-finished steel, steel billets used for making rebar and steel pipes, for example, solid steel slabs (up 122%), steel used for oil drilling machinery (up 72%) and so-called “line pipe”, which is used to transport liquids (up 66%).
In January, the largest steel import permits were for requests to buy from Canada (624,000 NT, up 20% vs. December final), Brazil (543,000 NT, up 377%), Mexico (407,000 NT, up 25%), South Korea (220,000 NT, up 5%) and Germany (117,000 NT, up 22%).
Trump is supposedly set to announce new Section 232 steel and aluminum tariffs. It is unclear if this will include downstream products, like the ones listed above that have seen large upticks in imports. It is also unclear if tariffs would erase the tariff rate quotas currently in place for Brazil, Japan, South Korea and the EU.
“U.S. Steel, Cleveland Cliffs, Nucor all sell U.S. steel but they wouldn’t be in business without me. I’m the consumer of this product and we are competing against products who are getting steel from China, from India, and other countries, and shipping those products here and taking over our markets.”
Mexico and Canada were also exempt from these tariffs, but Mexico is in breach of an agreement with Washington to keep steel product exports at median levels equal to 2015-2017 volume. But a rise of Mexican imports above those numbers in the U.S. made items like steel conduit, used to protect electric wiring, led to work furloughs and factory closures in the U.S.
Liberty Steel in Illinois is one of them.
In a statement to the Peoria Journal Starnewspaper, a spokesman forLiberty Steel blamed low-priced imports in steel wire for the decision to idle its Peoria mill in December. They did not say where the steel was coming from.
Zekelman Industries, a steel piping manufacturer, blames Mexico. They filed a lawsuit against Mexico in October.
Mexico Steel Tariffs Probable
Mexico complied with the steel agreement in its first year. Shipments to the U.S. declined in 2020 over 2019. But this could have been the Covid-effect, because by 2021, overall steel shipments began rising dramatically. Then, as the pandemic was declared officially over by May 2023, steel product imports from Mexico closed the year 36% over the 2015-2017 median agreed upon in the day.
CPA estimates that 2024 year-end trade data will reveal that steel product imports rose even higher.
Mexican steel producers are also continuing to grow their production facilities, with many plants having announced physical expansions and capacity increases that will likely lead to more product coming into the United States to the detriment of the local producer. Mexico’s market share in steel conduit, for example, has gone from around 2% to 20% since 2020.
Imports replace local manufacturing and often companies lose contracts with their buyers, leading to layoffs and less capacity utilization.
For the layman, that means if a factory is built to produce 100 steel beams and only produces 60, it is not producing to capacity. It means the factory is under-utilized, and companies are not going to expand a factory that they are not fully using.
CPA supports expanding Section 232 tariffs.
CPA said in a statement on Feb. 10 that Trump should also expand tariffs to cover steel imports from Canada, Greece, Poland and Ukraine. Quotas must be strictly enforced to ensure these actions are effective. The administration should close all loopholes that allow low-priced imports to bypass U.S. tariffs.
“We need to get to 80% capacity utilization for the steel industry to be profitable and to keep investing,” Jeff Ferry, CPA’s chief economist emeritus, told Charles Payne on Fox Business News on Monday afternoon.
“The focus (for the Trump administration) is how do we grow this economy over the next 10 years. Steel is instrumental,” Ferry said. “We had steel tariffs in 2017 and we saw new steel mills announced and these mills employ thousands of people, making a hundred thousand dollars on average.”
Payne warned of the incoming fire Trump will take when, and if, he expands the Section 232 tariffs this week.
“The 2018 tariffs were the highest tariffs we had since the Smoot-Hawley tariffs in 1930, but inflation went down from a little over 2% to 1.8%,” he said about the years prior to the pandemic messing up everything. “Inflation is all about fiscal and monetary policy, not tariffs. You need a tighter grip on money supply and government spending to control inflation,” he said.
New tariffs will likely spell the end of tariff rate quotas. But the U.S. needs a tariff policy that incentivizes more of the steel supply chain, moving deeper downstream to help American manufacturers that are losing markets to competitors who are making their goods with massively overproduced Chinese steel, for example.
Barry Zekelman, Zekelman Industries chairman and CEO, told CNBC show ‘The Exchange’ on Monday that additional tariffs cannot come soon enough.
“A lot of countries have violated these quota agreements. Trump is getting the conversation going,” Zekelman said. “We have to look further down the value chain into what steel goes into. It’s an easy argument to make that consumers will have trouble with the tariff. But it’s the other way around. Look what happens when you take jobs away from America. Thanks to tariffs, I invested over a billion dollars in my company.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Imports of Steel Surging Into the U.S. From Around the World
The U.S. economy has done well post-Covid. Demand for steel is an example. Despite Section 232 global steel tariffs and quotas on European raw steel, imports of steel slabs and steel products like steel rebar are up. Problem is, it is eating into domestic producer market share and companies are closing shop.
Steel import permit applications for January totaled 2,922,000 net tons (NT), a 23.4% increase in import interest from the 2,369,000 permit tons recorded in December and a 36.8% increase from the December final imports total of 2,135,000. These may not be final volumes, but are based on steel importers putting in requests to purchase.
Import permit tonnage for finished steel in January was 2,227,000, up 22.2% from the actual imports total of 1,822,000 in December. The estimated finished steel import market share for the U.S. producer in January was 25%, based on the Commerce Department’s most recent Steel Import Monitoring and Analysis data released in early February.
The biggest volume jumps month-over-month for January-December trade include steel rebar (up 178%), heavy structural shapes (up 174%), semi-finished steel, steel billets used for making rebar and steel pipes, for example, solid steel slabs (up 122%), steel used for oil drilling machinery (up 72%) and so-called “line pipe”, which is used to transport liquids (up 66%).
In January, the largest steel import permits were for requests to buy from Canada (624,000 NT, up 20% vs. December final), Brazil (543,000 NT, up 377%), Mexico (407,000 NT, up 25%), South Korea (220,000 NT, up 5%) and Germany (117,000 NT, up 22%).
Trump is supposedly set to announce new Section 232 steel and aluminum tariffs. It is unclear if this will include downstream products, like the ones listed above that have seen large upticks in imports. It is also unclear if tariffs would erase the tariff rate quotas currently in place for Brazil, Japan, South Korea and the EU.
Mexico and Canada were also exempt from these tariffs, but Mexico is in breach of an agreement with Washington to keep steel product exports at median levels equal to 2015-2017 volume. But a rise of Mexican imports above those numbers in the U.S. made items like steel conduit, used to protect electric wiring, led to work furloughs and factory closures in the U.S.
Liberty Steel in Illinois is one of them.
In a statement to the Peoria Journal Starnewspaper, a spokesman for Liberty Steel blamed low-priced imports in steel wire for the decision to idle its Peoria mill in December. They did not say where the steel was coming from.
Zekelman Industries, a steel piping manufacturer, blames Mexico. They filed a lawsuit against Mexico in October.
Mexico Steel Tariffs Probable
Mexico complied with the steel agreement in its first year. Shipments to the U.S. declined in 2020 over 2019. But this could have been the Covid-effect, because by 2021, overall steel shipments began rising dramatically. Then, as the pandemic was declared officially over by May 2023, steel product imports from Mexico closed the year 36% over the 2015-2017 median agreed upon in the day.
CPA estimates that 2024 year-end trade data will reveal that steel product imports rose even higher.
Mexico’s Violation of Steel Import Agreement is Threatening Local U.S. Economies
Read More »Mexican steel producers are also continuing to grow their production facilities, with many plants having announced physical expansions and capacity increases that will likely lead to more product coming into the United States to the detriment of the local producer. Mexico’s market share in steel conduit, for example, has gone from around 2% to 20% since 2020.
Imports replace local manufacturing and often companies lose contracts with their buyers, leading to layoffs and less capacity utilization.
For the layman, that means if a factory is built to produce 100 steel beams and only produces 60, it is not producing to capacity. It means the factory is under-utilized, and companies are not going to expand a factory that they are not fully using.
CPA supports expanding Section 232 tariffs.
CPA said in a statement on Feb. 10 that Trump should also expand tariffs to cover steel imports from Canada, Greece, Poland and Ukraine. Quotas must be strictly enforced to ensure these actions are effective. The administration should close all loopholes that allow low-priced imports to bypass U.S. tariffs.
“We need to get to 80% capacity utilization for the steel industry to be profitable and to keep investing,” Jeff Ferry, CPA’s chief economist emeritus, told Charles Payne on Fox Business News on Monday afternoon.
“The focus (for the Trump administration) is how do we grow this economy over the next 10 years. Steel is instrumental,” Ferry said. “We had steel tariffs in 2017 and we saw new steel mills announced and these mills employ thousands of people, making a hundred thousand dollars on average.”
Payne warned of the incoming fire Trump will take when, and if, he expands the Section 232 tariffs this week.
“The 2018 tariffs were the highest tariffs we had since the Smoot-Hawley tariffs in 1930, but inflation went down from a little over 2% to 1.8%,” he said about the years prior to the pandemic messing up everything. “Inflation is all about fiscal and monetary policy, not tariffs. You need a tighter grip on money supply and government spending to control inflation,” he said.
New tariffs will likely spell the end of tariff rate quotas. But the U.S. needs a tariff policy that incentivizes more of the steel supply chain, moving deeper downstream to help American manufacturers that are losing markets to competitors who are making their goods with massively overproduced Chinese steel, for example.
Barry Zekelman, Zekelman Industries chairman and CEO, told CNBC show ‘The Exchange’ on Monday that additional tariffs cannot come soon enough.
“A lot of countries have violated these quota agreements. Trump is getting the conversation going,” Zekelman said. “We have to look further down the value chain into what steel goes into. It’s an easy argument to make that consumers will have trouble with the tariff. But it’s the other way around. Look what happens when you take jobs away from America. Thanks to tariffs, I invested over a billion dollars in my company.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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