US Steel Import Restrictions Increase Risk

- Jun 01, 2020-

The survey results of foreign steel imports will be published as soon as this week

Analysts say the move could lead to trade retaliation and even impact on the current global trading system

According to foreign media reports, the findings of the US Department of Commerce on foreign steel imports are expected to be published as soon as this week, which may lead to the gradual implementation of President Trump's policy proposition of limiting steel imports on the basis of "national security". Allies represented by European Union countries have recently shown concern. Analysts say that if the U.S. adopts steel import restrictions, it will inevitably lead to trade retaliation and even impact the current global trading system.

According to Article 232 of the trade expansion act of 1962, the U.S. Department of Commerce launched an investigation in April into whether foreign imports of steel products harm the national security of the United States. The commerce department will submit a report on the impact of steel imports on national security to trump at the end of June, US Commerce Secretary rose said. Trump has launched two such surveys, one for aluminum and one for steel. The United States is also considering other investigations, rose said Tuesday.

If it is determined that steel imports threaten national security, trump will have 90 days to decide whether to use the "232 clause" compulsory authorization to make adjustments to product imports or take other non trade related measures. In determining what constitutes a threat to national security, U.S. law gives the president broad freedom of movement. Trump aides have also made it clear that they take a broader perspective than their predecessors.

At a conference hosted by the Wall Street Journal last week, U.S. Commerce Secretary rose said the definition of national security by law is much broader than you think. He pointed out indicators such as the impact of trade on employment. Rose said U.S. officials are not limited to military concerns. He pointed out that there is only one U.S. manufacturer of steel for transmission network transformers, which rose said is a legitimate national security issue for him.

NATO partners, who make steel and are likely to be hit by the move, are eager to refute national security claims in the near future, warning that the move could exacerbate tensions in the transatlantic alliance. In the past two weeks, military officials in Germany and the Netherlands have reflected their concerns to the US Department of defense and its minister, Matisse, according to the financial times. Washington officials say Matisse has conveyed their concerns. This lobbying strategy is highly unusual because U.S. defense officials are usually not involved in trade disputes.

Next month's G20 summit will be held in Hamburg, with Germany particularly concerned about the impact of us measures on steel imports. European officials have warned that the U.S. move to crack down on steel imports will fuel anti American sentiment in Europe, adding to existing friction over new U.S. sanctions against Russia, the U.S. withdrawal from the Paris climate agreement and Trump's skepticism of NATO.

The steel investigation also sparked another fierce trade debate within the US.

Trade hawks are pushing trump to impose full tariffs on imports, while pro business groups such as Gary Cohen, chairman of the National Economic Commission, are advocating restraint. After the Allies made a statement, Matisse also joined the camp of restraint.

The American Iron and Steel Association, which represents 70% of the U.S. steel production capacity, has called on the trump administration to rule as soon as possible that foreign steel imports harm the national security of the United States, so as to prevent steel imports and protect the domestic steel industry. The association claims that without the healthy development of the U.S. steel industry, the U.S. will soon lose the ability to produce steel products for national defense. The U.S. government should take a broader view of the impact of steel imports on national security.

However, the major trade and Manufacturers Association of the United States recently submitted a written opinion to the U.S. Department of Commerce, urging the U.S. government not to use the "232 clause" to widely restrict the import of foreign steel products, otherwise it will not only damage the interests of the U.S. steel consumer industry, weaken the international competitiveness of the U.S. manufacturing industry, but also cause trade retaliation from other countries.

In a written opinion submitted to the U.S. Department of Commerce, the National Council for foreign trade, representing more than 200 U.S. enterprises, said that the proportion of steel consumption industry in U.S. economic output and employment is far greater than that of steel production industry, and many steel consumption enterprises are also major suppliers of U.S. defense products such as ships, aircraft, high-tech weapons, etc. If the production capacity of these steel consuming enterprises is reduced, the national security of the United States will also be weakened.

The Council warned that widespread import restrictions on U.S. trading partners also risked trade retaliation or hurt many of the country's competitive industries.