One steel tariff approved, another up for grabs

Oct 15, 2024

The U.S. Department of Commerce has announced plans to investigate dumping of corrosion-resistance steel products, which could lead to more trade penalties on imported steel. Vladimir Zapletin/iStock/Getty Images Plus

Against the backdrop of vigorous debate on tariffs in this current presidential election, the White House finally imposed 25% tariffs on Chinese steel and aluminum. Meanwhile, the bigger issue for U.S. steel fabricators might be the percolating—and potentially momentous—tariff investigation by the Department of Commerce (DOC).

The DOC’s International Trade Administration (ITA) announced on Sept. 25 that the initiation of antidumping duty investigations on corrosion-resistant steel products from Australia, Brazil, Canada, Mexico, the Netherlands, South Africa, Taiwan, Turkey, the United Arab Emirates, and Vietnam, and countervailing duty (CVD) investigations of the same corrosion-resistant metals from Brazil, Canada, Mexico, and Vietnam.

Canada and Mexico are by far the dominant steel importers into the U.S. They far outdistance China, which ranks 10th among importers, or thereabouts, depending on the way imports are calculated.

Corrosion-resistant steel sheets are used primarily in the production of automobiles, trucks, appliances, industrial and agricultural equipment, and construction materials. The ITA has until the end of October to determine whether to proceed with an investigation. Steel Dynamics Inc., Nucor Corp., U.S. Steel Corp., Wheeling-Nippon Steel Inc., and some trade unions pushed the DOC to take up this case.

The alleged dumping margins, which could lead to tariffs, go as high as 159% in the case of Vietnam and as low as 9% in the case of Turkey. According to official U.S. import statistics, imports of corrosion-resistant steel products totaled $2.9 billion and 2.5 million tons in 2023, representing approximately three-quarters of all imports of such product into the U.S.

The steel manufacturers who initiated that corrosion-resistant steel products dumping case are at the same time pushing Congress to tighten import subsidy rules to make it easier for manufacturers to win—and importers to lose—CVD and dumping cases in the future. The American Iron and Steel Institute (AISI), in addition to the Steel Manufacturers Association and others, are supporting the Leveling the Playing Field 2.0 Act, introduced in the summer of 2023 and supported by both Democrats and Republicans.

“U.S. antidumping and countervailing duty laws have not been updated since 2015. As a result, they have not kept up with the efforts of many entities to circumvent and evade U.S. trade enforcement measures,” said Kevin Dempsey, AISI president and CEO.

Even as President Joe Biden’s administration approves of tariffs to support the domestic steel industry, steelmakers aren’t seeing similar support from Capitol Hill. Leveling the Playing Field 2.0 Act has not moved an inch in Congress in the past year and is unlikely to do so any time soon.

The new Biden steel and aluminum tariffs on China had nothing to do with dumping or subsidies. Rather, according to the U.S. Trade Representative (USTR), they were assessed, along with duties on other Chinese imports, because of China’s “… policies, and practices related to technology transfer, intellectual property, and innovation …” Separate tariffs on steel and aluminum from China did not previously exist. So not only are these new tariffs, but they are in addition to the Section 232-related 25% tariff on imported steel and the 10% tariff on imported aluminum that former President Donald Trump issued in 2018. (Section 232 of the Trade Expansion Act of 1962 gives the U.S. president the power to adjust imports of goods and materials from other countries when such imports pose a threat to national security.)

If a silver lining exists, besides the fact that steel imports from China are not huge, the USTR, which made the final decision, did not accede to the pleas of U.S. steel companies to extend the 25% tariffs to steel and aluminum products not covered by the Section 232 Trump tariffs.

“Data from the Department of Commerce's Section 232 exclusion process show that a majority of exclusions requested for products under the 17 subheadings were granted, and there is limited availability for the products outside of China,” a USTR report declared.

The USTR also refused suggestions that it include additional tariff codes covering upstream and downstream products related to steel and aluminum, but outside the scope of the Section 232 tariffs.