Washington, D.C. – U.S. Department of Commerce Secretary Wilbur Ross has recommended the Trump administration raise tariffs on imported steel and aluminum, calling the imports at threat to national security. Though much of the automotive steel and aluminum used by automakers is produced domestically, large volumes are imported, raising the specter of higher material prices for manufacturers.
The President is required to make a decision on the steel recommendations by April 11, 2018, and on the aluminum recommendations by April 19, 2018.
Ross’ group’s steel research found:
- The United States is the world’s largest importer of steel – purchasing nearly 4x what it produces
- Six basic oxygen furnaces and four electric furnaces have closed since 2000 and employment has dropped by 35% since 1998
- World steelmaking capacity is 2.4 billion metric tons, up 127% from 2000
- Recent global excess capacity is 700 million tons, almost 7x the annual total of U.S. steel consumption.
- China is by far the largest producer and exporter of steel, and the largest source of excess steel capacity. Their excess capacity exceeds total U.S. steel-making capacity
- On an average month, China produces nearly as much steel as the U.S. does in a year
- As of February 15, 2018, the U.S. had 169 antidumping and countervailing duty orders in place on steel, of which 29 are against China, and there are 25 ongoing investigations
Ross is recommending the Trump administration place at least a 24% tariff on steel imports from all countries or a 53% tariff on steel from Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey, and Vietnam. The larger tariff would be tied to a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States
Ross says tariffs would raise U.S. steel mill capacity utilization tom 80% from 73%.
With aluminum imports, Ross’ group found:
- Aluminum imports have risen to 90% of total demand for primary aluminum, up from 66% in 2012
- From 2013 to 2016 aluminum industry employment fell by 58%, 6 smelters shut down, and only two of the remaining five smelters are operating at capacity despite demand growth
- Military consumption of aluminum is a small percentage of total consumption and therefore is insufficient by itself to preserve the viability of the smelters
- The Commerce Department has recently brought trade cases to try to address the dumping of aluminum. As of February 15, 2018, the U.S. had two antidumping and countervailing duty orders in place on aluminum, both against China, and there are four ongoing investigations against China
Ross is recommending at least a 7.7% tariff on all aluminum exports from all countries, or a 23.6% tariff on aluminum from China, Hong Kong, Russia, Venezuela, and Vietnam. All other countries would be limited to their 2017 exports to the U.S.
Ross says the proposals would raise aluminum plant capacity utilization to 80% from 48%.