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Analysis: What Trump's steel directive means for US national security

Houston — President Donald Trump added a powerful arrow to the US' imported-steel-fighting quiver Thursday when he issued an executive memorandum directing the Commerce Department to investigate the impact of steel imports on national security.

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The order allows Commerce Secretary Wilbur Ross to deploy the seldom-used Section 232 of the Trade Expansion Act of 1962, bypassing most other trade-remedy actions that require an industry to demonstrate it has been injured by imports.

"Maintaining the production of American steel is extremely important to our national security and our defense industrial base," Trump said. "Steel is critical to both our economy and our military. This is not an area where we can afford to become dependent on foreign countries."

But exactly how important and critical is American steel to national defense from a pure military market perspective?

Not so much.



Since 2000, the US steel industry has shipped to domestic end markets an average of 96.4 million short tons/year, based on data from the Washington-based American Iron and Steel Institute.

The share of that going to military and defense needs is 1.6% at most -- or about 152,000 st/year on average. This includes all domestic steel shipments going to AISI classifications Shipbuilding and Marine Equipment, Aircraft and Aerospace, and Ordnance & Other Military. In fact, many of the tons going to shipbuilding and aircraft are for non-military, commercial use, so the share for military-only steel would be even less.

Such military-identified tonnage is minuscule when compared to other steel-consuming markets like construction (around 40% of domestic shipments) and automotive (about 17%), and in light of the fact that the US has the world's most powerful military complex.

Several steel executives were invited to the White House for the signing. Their reactions, issued afterwards, were universally positive but also broader in scope in connecting steel to national security.

Related: Find more content about Trump's administration in our news and analysis feature.

"We very much appreciate the Administration's decision to initiate and expedite the Section 232 investigation," John Brett, ArcelorMittal USA's CEO said in a statement. "ArcelorMittal USA is a proud supplier of American-made steel for national defense applications, from nuclear submarines and aircraft carriers to missiles and tanks," he added, continuing in part, "Additionally, the steel we produce for the energy and infrastructure markets is critical to our economic and national security."

Philip Bell, president of the Washington-based Steel Manufacturers Association, told S&P Global Platts that a broader, more inclusive look at national security makes more sense.

"It's not just about tanks, weapons, ships and such," Bell said. "It's about the nation's infrastructure -- and steel's use in building bridges, military bases, seaports, airports and more. If these aren't strong, the country can be brought to its knees. Such vital infrastructure requires quality steel products and adherence to quality standards."

--Joe Innace, joseph.innace@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com