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U.S. Steel: The Ball Is in President Trump’s Court Now

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President Trump

Last year, the Trump administration ordered a Section 232 investigation to assess whether steel imports threaten US national security. Now, the Commerce Department has submitted its findings to President Trump. According to the Commerce Department, “After this submission, by law, the President has 90 days to decide on any potential action based on the findings of the investigation.”

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Steel imports

While the results of the investigation aren’t public yet, any action under the probe could have a far-reaching impact on the US steel industry (SPY)(SPX). Notably, while steel producers like AK Steel (AKS), Nucor (NUE), and ArcelorMittal (MT) have been actively using the available trade remedies, there hasn’t been any sustainable reduction in US steel imports.

To make things worse, US steel imports rose sharply last year. Now, with the Section 232 imports probe, US steelmakers expect President Trump to act decisively against the menace of higher steel imports. U.S. Steel Corporation (X) has called “President Trump to take swift and decisive action” after the Section 232 investigation findings were submitted to him.

China

Notably, steel has been a flashpoint between China and the developed world for quite some time now. The issue of steel overcapacity was also mentioned in the annual G20 meeting. For its part, China maintains that the country has taken measures to curtail its excess steel capacity. To be sure, we have seen a sharp decline in Chinese steel exports. However, US steel imports have refused to die down despite lower steel exports from China.

In the next part of this series, we’ll see whether a potential trade action against China could trigger a trade war between the world’s two largest economies.

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