Metals industry backs new US tariff actions, but clash on targets

Industry groups across the US metals and mining sectors agreed that trade action is needed to counter excess capacity and forced labor abroad, but split over which countries should be targeted under President Donald Trump's evolving tariff strategy.

The US Trade Representative requested input after launching two tariff investigations following the Supreme Court's decision to overturn President Donald Trump's country-specific tariffs. Section 301 of the Trade Act of 1974 authorizes investigations into whether countries engage in unfair acts that restrict US commerce. These investigations can result in new tariffs or import restrictions.

USTR's request comes as the Trump administration turns to alternative tariff methods after the Supreme Court ruling. Following the decision, Trump implemented a temporary 10% global tariff that expires in July.

The first Section 301 investigation alleges 16 countries – including China, the European Union, Indonesia, Vietnam, Korea, Japan, Mexico and India – developed production capacity that has resulted in overproduction and large trade surpluses. The second investigation alleges that 60 countries fail to prohibit the import of goods produced with forced labor.

In comments submitted to USTR, metals industry groups and companies backed tougher trade action from the US, but offered competing views on which trading partners should face new Section 301 trade penalties.

China largest contributor to excess capacity

There was a clear consensus among industry groups that global metals markets are facing overcapacity.

This is often driven by state interventions leading to price distortions, trade imbalances, weakened domestic industries and the discouragement of new investments, they wrote.

For a metal like steel, global excess capacity is expected to reach 721 million metric tons in 2027 and rise through 2028, the Steel Manufacturers Association wrote in their comments, citing the Global Forum on Steel Excess Capacity.

"As global overcapacity continues to increase, US producers face the threat of renewed surges of steel imports, due to exports not only from China but also from other trading partners that are unwilling to right-size their steel industries," Brandon Farris, SMA's executive vice president, wrote.

Most metals groups identified China as the largest contributor to excess capacity and a dominant player in the steel, aluminum, battery and critical minerals sectors.

SAFE, an energy and supply chain organization, recommended the USTR prioritize investigating China over other economies to address its efforts to undermine domestic metals producers.

"Fueled by state-directed investment, Chinese producers refine more copper, produce more steel, and smelt more aluminum than any other country by far," Joe Quinn, executive director of SAFE's Center for Strategic Industrial Materials, testified at a hearing on the investigation on May 5. "These major metals serve as the backbone of the US defense industrial base and require significant federal policy intervention beyond existing tariff actions.

Disagreement on which countries

There were varying opinions from metals groups on which of the 16 countries should be subject to trade measures under the excess capacity investigation.

Metals groups abroad - European Aluminum, European Metals, the Korea Iron and Steel Association, and the Indian Steel Association - argued that the countries they represent are not sources of overcapacity and should not be subject to additional trade penalties.

"The EU, Norway and other European Economic Area countries are trusted partners for the United States and subjecting them to additional Section 301 tariffs undercuts the spirit of last summer's Turnberry framework agreement and would be unfounded," wrote European Metals, a non-ferrous metals association, referencing the US-EU trade deal reached in Turnberry, Scotland, that lowered tariffs to 15% on most EU imports.

The China Iron and Steel Association called the Section 301 investigation "a typical act of unilateralism that severely undermines the international economic and trade order" in written comments to the USTR. The association argued that priority should be given to the green transformation of steel capacity and accused the US of suppressing other countries' efforts to modernize their steel industries.

"We hope the US government and relevant industries will abandon the zero-sum mindset and break away from the obsession with tariffs, respect the development rights of other countries and regions, correct their wrong practices and halt the relevant 301 investigation," the association wrote.

US-based metals groups argue that overcapacity is global, not just pinpointed to China, and pushed the USTR to consider penalties on all major trading partners.

Other groups were more specific. Alcoa, a US-based aluminum producer, asked the USTR not to take action in the aluminum sector against Norway or the EU, but requested trade measures to protect the US aluminum value chain in China, India and Mexico.

SMA pushed for actions against economies beyond China, writing that excess capacity "is not just a China problem," and suggesting the USTR add countries like Turkey, Algeria, and the United Kingdom to their investigation list.

Steel Dynamics, a US-based steel producer, also endorsed trade measures against multiple economies.

Imposing trade remedies

Industry groups also varied on how Section 301 remedies should be applied, specifically with raw materials, capital equipment and existing tariffs.

European metals associations warned that broad tariffs could risk fragmenting supply chains, while the US industry said broad coverage is necessary to prevent loopholes and circumvention.

Steel Dynamics, a steel producer, and Aluminum Dynamics, a recycler, argued Section 232 tariffs, including the 50% tariffs imposed on steel and aluminum, along with antidumping duties and countervailing duties, have not been enough to combat excess capacity. They are seeking cumulative tariffs, where Section 301 tariffs stack on top of existing duties rather than replace them.

"Simply replacing existing tariffs such as the Section 232 tariffs with tariffs from these investigations – or exempting products covered by those measures from any actions taken here – would only shift the tariffs paid on the imported products from one tariff bucket to another," Steel Dynamics wrote in comments to USTR.

Caterpillar, a manufacturer of construction and mining equipment, recommended USTR not impose new Section 301 duties on products or inputs already subject to Section 232 tariffs and requested that Section 301 duties do not apply to goods imported solely for remanufacturing in the US.

"Stacking additional Section 301 tariffs on these same products would further exacerbate cost pressures, disrupt supply chains, undermine US export competitiveness and fail to address the specific practices Section 301 is intended to address," Caterpillar wrote to the USTR.

Nucor, a North American steel producer, noted that imposing Section 301 duties on steelmaking equipment or raw materials like pig iron and direct-reduced iron would have negative effects.

"As the Administration considers much needed Section 301 measures to address growing excess steel capacity, it is critical that these measures do not undermine the President's other major trade policy priorities," Nucor wrote in comments to the USTR.

China seen as target for forced labor investigation

USTR's investigation into countries that fail to prohibit the import of goods produced with forced labor drew more consensus from metals groups, indicating opposition to forced labor and identifying the problem as systemic.

While USTR's investigations span 60 countries, many groups identified China as the main violator of forced labor practices.

Similar to the excess capacity investigation, foreign industry groups argued they should be exempt from Section 301 remedies under this investigation and said their sectors are compliant without evidence of forced labor.

The Aluminum Extruders Council, an international trade association, detailed China's use of forced labor in aluminum production and encouraged the USTR to impose Section 301 measures from the investigation in addition to Section 232 tariffs.

"Not only does China export its massive extruded aluminum capacity to the United States, at least some of which is produced from Chinese forced labor, it also exports the forced labor itself - especially to Central and South America and to Mexico," the council wrote to the USTR.

Several groups, including the Aluminum Association, opposed stacking new 301 tariffs on top of existing Section 232 steel and aluminum tariffs. While others, like US steel industry organizations and the Aluminum Extruders Council, pushed to stack 301 tariffs on top of already existing tariffs.

"Forced labor is a human‑rights concern, but it is also a trade-distorting practice that suppresses wages, lowers production costs, and confers an unfair competitive advantage to foreign producers that rely on coercive labor systems," the Alliance for American Manufacturing wrote.