- The US steel industry wants more tariff protection from the Trump administration. In 2018, President Trump imposed a 25% tariff on US steel imports. Earlier this year, the administration expanded the tariffs to some downstream product categories.
- Cleveland-Cliffs, which will acquire AK Steel, has warned of job losses if tariffs aren’t imposed on downstream electric steel products.
US steel industry
Over the last four years, the US steel industry has received several tariffs reprieves. In 2016, the US imposed massive tariffs on flat-rolled steel imports from several countries including China and South Korea. Later, the US extended the tariffs to prevent transshipments of the products from Vietnam. In 2018, President Trump also delivered on his electoral promise and imposed a 25% tariff on US steel imports under Section 232 of the Trade Expansion Act of 1962. Earlier this year, the US also covered some downstream steel products under Section 232 tariffs. President Trump has used tariffs liberally throughout his tenure. In December 2018, he called himself a “Tariff Man.”
Trump’s Section 232 tariffs
The US steel industry has announced job losses despite the tariffs. Last year, U.S. Steel Corporation (NYSE:X) and ArcelorMittal (NYSE:MT) announced capacity curtailments. U.S. Steel Corporation has been hit particularly hard. The company’s stock price is near its all-time low. Despite several rounds of tariffs over the last four years, the US steel industry hasn’t had enough of them. Now, Cleveland-Cliffs (NYSE:CLF), which will acquire AK Steel (NYSE:AKS), warned of 1,600 job losses if tariffs aren’t imposed on downstream electric steel products.
US steel industry and tariffs
Previously, AK Steel said that downstream electric steel imports rose after the Section 232 tariffs. Overall, US steel imports have fallen since the tariffs were imposed. However, electric steel is a special case. AK Steel is the only producer of electric steel in the US. There aren’t many steel companies globally that produce electric steel.
Several critics warned that downstream steel imports might rise after the Section 232 tariffs. I think that electric steel is a strategic product category. There should be safeguards in place to prevent imports of subsidized products. Ultimately, the buck has to stop somewhere. The US can’t keep imposing tariffs on products where imports surge due to Section 232 tariffs. In 2002, President George Bush also experimented with steel tariffs. However, he lifted the tariffs within two years. Read Will Trump’s Steel Tariffs Fail Like Bush’s Tariffs? to learn more.