SECTION 232: TARIFFS ON STEEL IMPORTS
What is Section 232?
And what has it meant for the steel industry?
Tackling excess steel capacity from China
By Elizabeth Brotherton-Bunch, Senior Vice President for Communications, Alliance for American Manufacturing
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President Trump made a “bigly”
move in March 2018 when he
placed “Section 232” tariffs on
steel imports.
You’ve no doubt seen the litany of
headlines about this trade enforcement
action, as there has been an incredible
amount of punditry dedicated to it over
the past year and a half. But what did
Section 232 mean for the steel industry,
and how did we get here in the
first place?
The story begins long before Trump even
took office, as China worked to grow its
steel industry following its entry into the
World Trade Organization (WTO).
China’s government didn’t just want to
make steel for its own needs. It actively
worked to dominate the global market by
heavily subsidizing its industry, increasing
its steelmaking capacity by 662 percent
since 2000.
This ended up creating a massive steel
overcapacity problem. China made way
more steel than it could use and dumped
it onto the global market at rock-bottom
prices, far below fair market value.
All that extra steel led to some devastating
consequences.
growing concern about the potential consequences
if China succeeded in monopolizing
the steel market, both in the United
States and worldwide.
In April 2017, the Commerce Department
launched a “Section 232” investigation to
determine whether surging steel imports
threatened U.S. national security. Steel is
used in an array of military purposes, from
armor plate on tanks to the hulls of battleships,
as well as in critical infrastructure like
bridges and the electric grid. And America
needs its factories already up-and-running
to access steel quickly – would the United
States really want to find itself dependent
on China in a crisis?
Not surprisingly, Commerce found that
there was a national security threat posed
by steel imports. In response, Trump issued
a 25 percent tariff on all steel imports in
March 2018.
Not everybody was pleased, of course.
The tariff announcement was made in
typical Trump style (read: chaotic) and
there was significant debate over whether
allies like Canada should be granted
an exemption to the tariffs (Canada and
Mexico both were eventually given one in
2019 as part of the negotiations around
Steel companies in the United States
were forced to close dozens of facilities and
lay off tens of thousands of workers, as they
couldn’t compete against the Chinese government.
The market was rigged by China,
in China’s favor.
And everybody knew it – even China
admitted that it was making too much steel
and needed to cut capacity. But without any
enforceable mechanisms to force China to
uphold its promises, the steel overcapacity
crisis continued.
The Obama Administration responded
by issuing tariffs on specific steel products
– sometimes as high as 522 percent. Former
President Barack Obama notably even used
his last trip to the G-20 Summit to urge
China to tackle its excess capacity.
But it wasn’t enough. China repeatedly
broke its promises to reduce its steel capacity,
and was able to dodge the individual tariffs
by shipping products through countries
like Vietnam.
The crisis worsened. American steel
companies continued to fight an uphill battle,
and American steelworkers continued
to suffer layoffs.
By the time Trump took office, it was
clear broad action was needed. There was
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