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AISI voices opposition to US Section 232 tariff legislation

Pittsburgh — The American Iron and Steel Institute said Friday the Section 232 tariffs on steel imports are working to improve conditions in the US steel industry, although the progress that has been made would be lost if the tariffs are removed prematurely.

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US lawmakers introduced legislation in the Senate and House of Representatives January 30 that, if passed, would shift the president's authority to implement Section 232 tariffs to Congress and could bring an end to the existing Section 232 tariffs on steel and aluminum imports.

Known as the Bicameral Congressional Trade Authority Act of 2019, the legislation introduced in the House and Senate would restore Congress' trade responsibilities under Section 232 by giving the legislative branch final authority in implementing tariffs related to national security threats. The newly proposed legislation also would be retroactive to the tariffs on steel and aluminum. Should the legislation pass, if Congress does not also pass an approval resolution within 75 days after the bill becomes law, all Section 232 tariffs and quotas imposed within the last four years would be removed.

US President Donald Trump's administration used Section 232 in March 2018 when it introduced tariffs of 25% on steel imports and 10% on aluminum imports.

"The Administration's trade actions and tax and regulatory reform policies, in addition to the strong economic climate enabled by those policies, have allowed the American steel industry to begin to recover after more than a decade of low capacity utilization and weaker earnings due to repeated surges in imports fueled by global steel overcapacity," AISI CEO Thomas Gibson said in a statement. "Capacity utilization at existing mills has increased in recent months to over 80 percent -- levels not seen in the last 10 years."

The US raw steel weekly capability utilization level rose to 81.1% in the week ended January 26, with US steelmakers producing 1.92 million st of raw steel, according to the most recent data from the AISI.

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Gibson noted that in the wake of the tariffs, shuttered US steel plants are being re-opened and steelworkers that have been laid off are going back to work as companies are investing in new steel production facilitates.

"But this recent progress will disappear, and our steel industry will again suffer dire circumstances, if the tariffs are prematurely terminated," Gibson said. "The massive overcapacity in steel still exists globally. And China in particular is producing steel at record levels -- exceeding one billion net tons in 2018. This means there is plenty of excess supply that will flood into our market but for the continuation of the Section 232 tariffs. The Section 232 trade remedy is critical to ensuring steel remains a vital asset for our national and economic security."

A second bipartisan bill challenging Trump's authority to introduce tariffs under Section 232 was introduced in the House and Senate February 6. Known as the Trade Security Act, the legislation would require the Department of Defense -- not the Department of Commerce -- to justify the national security basis for new tariffs under Section 232 and would give Congress a larger role in 232 actions by allowing the legislative branch to disapprove of a Section 232 action by passing a joint resolution of disapproval.

Unsurprisingly, groups opposed to the tariffs have shown support for the bills and are encouraging lawmakers to move forward with legislation quickly.

"It's long past time to restore common sense to the process of slapping tariffs on our trading partners, especially at a time when those tariffs are hitting our allies," Tariffs Hurt the Heartland said in a statement. The group, which represents 150 trade associations, was formed in response to the Section 232 and 301 tariffs imposed by the Trump administration.

"The bills recently introduced represent important and necessary checks on Section 232 authority that's increasingly being abused under the administration," the group continued. "Providing congressional oversight would help limit the likelihood that the critical imports that American businesses, consumers and farmers rely on are wrongly targeted as 'national security threats.'"

The legislation introduced should also be a stern message to the administration that the Section 232 tariffs on automotive imports that are being considered would be a "colossal mistake," the group said.

Following the Section 232 investigations into steel and aluminum, Trump directed Commerce to look into auto and uranium imports to see if they posed a threat to national security. Commerce's report on automotive imports is due to the president February 17.

-- Justine Coyne, justine.coyne@spglobal.com

-- Edited by Annie Siebert, newsdesk@spglobal.com