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Section 232 steel investigation result could be subject to 'fine tuning': AISI

New York — US steel mills are expecting the US Department of Commerce to find that US national security is threatened by steel imports in its Section 232 investigation, but the potential remedies proposed may be subject to adjustments, according to the American Iron and Steel Institute.

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Related podcast: Section 232 overshadows Chinese steel price recovery

"We certainly look forward to working with the administration as they develop and finalize [trade actions], making sure it's done in the right way so that it can be most effective. And I think there will need to be some fine tuning on that, but we don't know exactly what's being proposed yet," said Kevin Dempsey, senior vice president of public policy for the AISI.

Dempsey said there are indications that a draft of the Section 232 report is being shared in the government, and even though the administration is close to being ready to release the report, it may wait until after the G-20 Summit in Hamburg, Germany, on July 7-8 to announce the results.



After Commerce issues its recommendations, the president has 90 days to take action under Section 232 of the Trade Expansion Act of 1962. The statute gives the president flexibility to impose trade restrictions, which may take the form of tariffs, tariff-rate quotas, import fees and voluntary restraint agreements.

AISI did not ask the administration to launch an investigation under Section 232, but the association is supportive of the administration's use of the tool.

The Trump administration has been supportive of using it to adjust imports of steel, aluminum and possibly other products, Dempsey said. Even though China is central to the overcapacity issue, the trade actions proposed need to target multiple countries to be effective, he said.

"I think though the goal of all that effort should be to incentivize all the countries around the world to join in taking common action to address the underlying problem," Dempsey said.

Canada and Mexico helped the effort by filing antidumping and countervailing duty investigations on steel products that are similar to US trade actions.

Some countries have already raised the issue of potential retaliation if the US blocks imports under Section 232.

Dempsey said the threat of retaliation always exists and countries have taken retaliatory measures in response to antidumping and countervailing duties.

"If you never took trade action because of the threat of retaliation, you would never take trade action because there's always going to be a threat of that," he said.

The World Trade Organization allows countries to take trade actions on the grounds of national security, but this is a provision that is not familiar, Dempsey said.

"We'll be in an unusual area here. I don't think the WTO has ever had a case where they've defined what meets the test of national security. Traditionally national security has been what the party evoking it defines what they consider what national security means, so there's no record of WTO rulings on that," Dempsey said.

The AISI reported that US steel for national defense and homeland security applications make up only 3% of US shipments; however, the association has encouraged the administration to adopt a broader definition of national security that will include infrastructure and ensure commercial viability for steel mills.

--Estelle Tran, estelle.tran@spglobal.com
--Edited by Jason Lindquist, jason.lindquist@spglobal.com