In a move that's widely expected to boost the local steel industry, the Trump administration is expanding its Section 232 steel tariffs of 25 percent to three of the United States' largest trading partners: Mexico, Canada and the European Union.
The Department of Commerce had excluded all three, the biggest exporters of steel into the United States, from the much-hyped tariffs that were originally imposed in March, leading some industry observers to question their efficacy. The American Iron and Steel Institute reports U.S. production only has risen by 1.9 percent this year, and U.S. steelmakers' first-quarter profits were not as high as some analysts expected.
But now the exemptions on Mexico, Canada and the EU are being lifted, and tariffs will be collected starting Friday.
"The Administration will continue discussions with them and remains open to discussions with other countries," the Trump administration said in a news release. "The Trump Administration’s actions underscore its commitment to good-faith negotiations with our allies to enhance our national security while supporting American workers. The Administration will continue to monitor steel and aluminum imports and adjust the measures in effect as necessary to protect the national security of the United States."
The American Iron and Steel Institute said the action would help ensure a strong American steel industry, protecting steelworker jobs in Northwest Indiana and elsewhere.
AISI President and CEO Thomas Gibson credited the tariffs — imposed through a rarely used provision citing national security concerns about becoming too reliant on foreign steel — with restoring jobs in Ohio and Illinois, where U.S. Steel restarted Granite City Works.
"The U.S. producers of AISI fully support the administration’s position that any country that is granted an exemption from the tariffs must be subject to a quota, in order to safeguard against the exempt country becoming a conduit for trade diversion, transshipment and import surges," Gibson said. "We look forward to additional details on how the exemption for Australia will further the objectives of Section 232. The president wants the industry to achieve 80 percent or more capacity utilization over the long-term. We wholeheartedly agree. We believe the NAFTA discussions should continue as they can be a basis for ensuring use of more NAFTA steel while achieving the objectives of the Section 232 remedies."
Alliance for American Manufacturing President Scott Paul said the steel and aluminum tariffs helped preserve the estimated two million jobs supported by the American steel industry.
“There is evidence the Section 232 strategy is working as the Trump administration moves ahead with its steel and aluminum trade actions," Paul said. "American smelters and steel mills are reopening, which means more jobs and added capacity. And more pressure is being applied by our allies to China on steel dumping and overcapacity. Looking ahead, the product exclusion process must be reasonable, and narrow enough so that it does not undermine the intent of the relief. The goals of restoring American industries to a sustainable operating domestic capacity and protecting national security must remain paramount."
Canada, Mexico and Europe all said they would pursue retaliatory tariffs on a range of U.S. products, including flat steel, pork bellies, apples, grapes, cheese, orange juice, peanut butter, kitchenware, clothing and footwear, washing machines, textiles, whiskey, motorcycles, boats and batteries.
Free trade groups also questioned whether the tariffs are good policy for the overall economy.
"Make no mistake: restricting the raw material supply in the U.S. and imposing tariffs on imports from our closest trading partners places American manufacturers directly in harm’s way," said Paul Nathanson, a spokesperson for The Coalition of American Metal Manufacturers and Users. "The pain will by no means be limited to the manufacturing sector; a slew of other U.S.-made products will soon be penalized with retaliatory tariffs by our major export trading partners."
Manufacturers already are paying higher prices for steel and aluminum, which ultimately gets passed onto consumers, Nathanson said.
"The bottom line is that when U.S. manufacturers pay vastly more for steel and aluminum than manufacturers anywhere else in the world it undermines their ability to compete and be successful on the global market," he said. "The tariffs particularly impact small and medium sized companies who will lose business to their overseas competitors. Our members are also reporting concerns over their own exports as their overseas customers shift to non-U.S. suppliers who do not face government restrictions on steel and aluminum. And when a customer removes you from their supply chain, especially for smaller, family-owned businesses, it is tough to bring that work back to the U.S."