Editor’s note. The 232 tariffs have succeeded in getting the steel industry to the 80% capacity utilization target. Steel prices are now below pre-tariff levels, because the industry can be profitable with the same prices as before because fixed costs are spread across more output.
The domestic steel industry last week exceeded the capacity utilization level targeted by the Commerce Department last year in its Section 232 report to the White House on steel imports, which was used to justify 25 percent tariffs on U.S. trading partners.
[Isabelle Hoagland | February 25, 2019 | Inside U.S. Trade]
Statistics from the American Iron and Steel Institute show U.S. capacity utilization levels have risen from 76 percent last April to above 80 percent last week. The report called that level “roughly” what was needed to make the industry viable over the long term.
The metric prompted White House economic adviser Kevin Hassett to state on Monday that the steel tariffs were working as intended.
“Given the latest data on steel production capacity we’ve got capacity utilization up to about 83 percent,” he said during a National Governors Association event at the U.S. Chamber of Commerce. “And so the desired effect of increasing capacity utilization in the U.S., so that for national security reasons we can count on our steel industry, it feels like it’s accomplished.”
Commerce Secretary Wilbur Ross’ steel report, made public last Feb. 22, outlined a number of remedies including the imposition of a 24 percent tariff on all imports. Such a remedy, the report said, could be used to increase domestic steel production to roughly 80 percent, the level characterized as “the minimum rate needed for the long-term viability of the industry.”
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