Latest US trade restriction beef pits farmers against steelworkers

The National Sunflower Association has spoken.

It was one of 18 American agricultural associations that came out against President Donald Trump's initiative to protect the domestic steel and aluminum industries under the US' Section 232 national defense provision on trade.

The July 11 letter to Commerce Secretary Wilbur Ross expressed extreme concern that application of the 1962 law "could be disastrous for the global trading system" and for US agriculture in particular.

"US agriculture is highly dependent on exports, which means it is particularly vulnerable to retaliation," the letter states. "Many countries that export steel to the United States are also large importers of US agriculture products. The potential for retaliation from these trading partners is very real."

Put another way, the National Cattlemen's Beef Association sees the initiative as anything but a nothingburger.

The farmers' protest was among several recent hits against the Section 232 investigation. The President's Council of Economic Advisers, also this week, advised against putting tariffs and/or quotas on America's most high-volume metals imports, saying they would not help the US economy, burden America's consumers and possibly spark a trade war. They noted that any further restrictions would be in addition to the more than 150 antidumping and countervailing duties currently in place against steel imports.

Some in the steel market expected a reveal of the Section 232 direction by the end of last month, but the Trump administration, after returning from the recent G20 Summit in Hamburg, Germany, suggested it would hold negotiations with America's trading partners before taking any action. A renewed international effort to reduce global steel overcapacity was seen as another factor potentially slowing the Section 232 process, as some believe Trump could be moving toward a more diplomatic approach.

The agriculture letter was forwarded to S&P Global Platts by the American Institute for International Steel, representing steel traders and port interests. For obvious reasons, it lodged an early protest against the Section 232 case and said the farmers' complaint highlights "already large and growing unpopularity of this potentially detrimental protectionist initiative."

The AIIS also noted "the somewhat surprising and unexpected delays in completing the investigation phase of this process."

Steel markets remain tentative given the lack of clarity on Section 232, which could ultimately put restrictions on steel imports that would substantially raise the price of domestically produced steel. However, there were signs this week that industry players have reduced their anticipation level and could be resuming more normal levels of business, albeit with the threat of trade restrictions still hanging over their heads.

Trump targeted the steel industry for help during his presidential campaign, sending signals to those who eventually voted for him in large numbers that he cared about the working man.

The American steelworker has iconic status, but so do American farmers, another pro-Trump demographic. One of the 18 signatories to the agriculture protest letter, the American Farm Bureau Federation, itself has over 6 million members — an extremely large and diverse group with lots of grassroots clout.

Will Trump pick steel over agriculture? He might, but then he must go tell it to the US Dry Pea and Lentil Council.