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Section 232 tariff retention, infrastructure spending top priorities under Biden: AISI


No change to Section 232 expected near-term

Biden has committed to review of all Trump tariffs

  • Author
  • Justine Coyne
  • Editor
  • Richard Rubin
  • Commodity
  • Metals

Pittsburgh — Maintaining the existing US Section 232 tariffs on steel imports and passage of a large-scale infrastructure bill are among the priorities the American Iron and Steel Institute is pushing for as President-elect Joe Biden is set to take office in January, according to AISI interim CEO Kevin Dempsey.

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Stating that he is not expecting to see a near-term change to the 25% steel import tariff put in place by President Donald Trump in March 2018 under Section 232 of the Trade Expansion Act of 1962, Dempsey said now is not the time to remove the tariffs in light of increasing global overcapacity concerns.

"Given all that is going on, we think it would be very dangerous to lift the steel tariffs now," Dempsey said in a recent interview with S&P Global Platts.. "Frankly, that could lead to a repeat of we've seen the last couple of decades in the wake of other global economic shocks."

At the most recent meeting of the Organisation for Economic Cooperation and Development's steel forum in late September, the group noted "a deep concern" regarding increases in steelmaking capacity, which may not reflect market fundamentals, resulting in a capacity-production gap that is expected to reach 700 million mt this year after narrowing between 2016 and 2019.

The group also said that despite the global negative demand shock caused by the coronavirus pandemic, production and inventories have significantly increased from year-ago levels in China. Increased production and the unwinding of these inventories in China could lead to a global crisis for steel, Dempsey said.

"We're very lucky that we have not seen a new surge in imports in the wake of COVID-19 as we recover from the shock this year, but I think that is due in part to the steel tariffs being in place," Dempsey said. "If a new administration suddenly lifted the tariffs, that would be conditions ripe for a big surge of imports that would be devasting for the US industry and devastating for steelworkers who were one of the core constituencies supporting President-elect Biden in his last campaign."

Biden to review tariffs

In response to questions from the United Steelworkers union in May, Biden said his administration would review the Section 232 tariffs on steel and aluminum, as well as the other tariffs put in place under the Trump administration.

"The Trump Administration's actions on steel and aluminum have brought some short-term relief, but done nothing to address the long-term challenges facing these sectors," Biden said at the time, adding his administration would enlist the US' international allies to collectively tackle unfair practices to ensure fair trade in steel, aluminum and other products.

The AISI supports a cooperative approach to enforcement, Dempsey said.

"We think the way for the new administration to work closely with our allies on trade issues is to coordinate better and work together to all take strong trade enforcement actions using our various national laws to take a common approach in responding to the global overcapacity problems, whether that is China or Southeast Asia or even Turkey," he said. "Rather than talking about tariffs lifted here and there that would create loopholes in our system that will allow imports to flood in, we should be saying how do we get the US, EU and other trading partners working together in a coordinated fashion to enforce our respective trade laws against subsidized and dumped steel coming in from a number of countries around the world."

Given the opportunity to make a case for the tariffs and provide justification for their continuation, the AISI believes there is a strong case to maintain the tariff program, Dempsey said.

"We're going to be very focused over the next several months in making that case to the transition and new administration when they come into office," he said.

The AISI also is hopeful that Congress could move forward with passing meaningful infrastructure funding in the wake of the coronavirus, Dempsey said. With a closely divided Senate, it's likely that there will be a greater emphasis on moderation when it comes to infrastructure spending and less of a push to enact climate policy initiatives in an infrastructure package, he said.

"I think that's going to drive things more to the center because that's going to be the only way to get things done, there has to be more compromise," Dempsey said. "On something like infrastructure, I don't believe that is going to create an obstacle because infrastructure at its core is very bipartisan with strong support. There will be strong support I think from both sides of the aisle from both bodies on passing some major infrastructure legislation that is overdue."