Emergency tariffs will help to protect domestic steel producers against surging imports
Washington. The Coalition for a Prosperous American (CPA) strongly applauds President Trump’s announcement of Section 232 safeguard tariffs on an unprecedented surge of steel and aluminum imports. The US Commerce Department recently reported that a wave of heavily subsidized steel and aluminum from China and 11 other countries “threaten to impair the national security” of the United States. In response, President Trump said today that he will impose 25 percent tariffs on steel imports from all countries, with no exceptions. He has also announced 10 percent tariffs on all aluminum imports, with no exceptions.
“President Trump has sent a clear message that China and other nations will be held accountable for flagrantly violating the rules of world trade,” said Dan DiMicco, Chairman of CPA. “China has brazenly flouted the rules of global trade for years. Such cheating should not be tolerated, particularly when our steel and aluminum producers continue to play by the rules of international trade.”
In the last nine years, China has increased its steel production 65 percent and now accounts for 50 percent of world production and 23 percent of world steel exports. China is now the world’s largest steel producer, thanks to massive subsidies, state mandates, and an undervalued currency that artificially lowers the cost of exports. Similarly, South Korea and other countries have already been found to subsidize their steel industries, with the Department of Commerce previously levying an astonishing 169 tariff orders on steel due to foreign subsidies and dumping of product at below the cost of production in the US market.
“For years, China has simply overproduced millions of tons of steel, and happily dumped it in the United States,” said Michael Stumo, CEO of CPA. “The US has remained completely open and vulnerable to such oversupply, and the result has been lost jobs and real damage to our domestic steelmaking capacity. It is important that the tariffs be long term so investors are confident in increasing US plant capacity.”
Research by CPA has found that China’s 2016 steel production of 808 million tons is up 65 percent from 2007 levels. Despite global calls for China to reduce steel supply, production has continued to rise. Today, China produces more steel than the next nine steel-producing nations combined. In response to this glut of steel, America’s steel industry has cut production by 20 percent over the past decade, and US steel employment has fallen by roughly 50,000 jobs since 2000. Key steelmaking plants have closed, and for certain types of steel (such as those used in electrical transformers), only one US producer remains.
“As the Commerce Department has already noted, these emergency tariffs will help to ensure the long-term viability of our nation’s steel industry,” said DiMicco. “It’s critical that the United States maintains a vibrant steel industry to confront changing economic and national security concerns around the world.”
Stumo adds that the downstream effects of tariffs must also be addressed. “US companies that buy steel to make lawn mowers, hand tools, and other products should be protected as well. Their competitors will continue buying artificially cheap foreign steel to manufacture and export to America, undercutting the prices of American-made products. The administration needs to focus on protecting the entire supply chain through trade enforcement and addressing our overvalued dollar.”
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