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As the Trump Administration continues to study whether imported steel poses a threat to US national security, three disparate groups -- the American Institute for International Steel, the National Chicken Council and the American Soybean Association -- came together Tuesday and made public a new report showing "the destructive effect of steel tariffs on the broader US steel supply chain."

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The US agriculture industry, in particular, would feel the impact of shipping disruption, and potential trade retaliation, according to the report, as well as comments from trade association representatives.

Most of the ocean vessels carrying imported steel into Gulf Coast ports and Great Lakes ports, provide the backhaul vessel capacity to move grain exports from the US to overseas destinations, according to John Martin, principal economist at Lancaster, Pennsylvania-based Martin Associates, who unveiled the report at a joint press conference in Washington.

Martin noted that the 34.4 million st of iron and steel handled at US seaports last year supported 1.3 million jobs, and nearly $240 billion of total economic activity, or 1.3% of total US GDP last year.



"If restrictions are imposed on the imported iron and steel products, not only will the 1.3 million jobs be at risk, but the ocean cost to export grain from the US, particularly from the Lower Mississippi River, will increase due to the restricted number of vessels that will be available to carry grain exports," Martin explained. "This in turn will have a ripple effect into the nation's agricultural sector."

Martin Associates is a consultancy that has done more than 600 seaport economic impact studies for most of the ports in the US.


47 MILLION ST OF GRAIN AT RISK


If steel imports are restricted, Martin maintains that potentially 47 million st of grain exported via Lower Mississippi River ports in 2016, would be at risk. The report notes that there were 10,830 direct and indirect jobs created by these grain exports on the marine transportation system, and grain exports supported an additional 39,000 jobs in the US agricultural sector.

Martin was joined by John Foster, chairman of AIIS, and Richard Chriss, president of the same steel traders group; Kevin Brosch, an attorney representing the National Chicken Council, and Patrick Delaney, director of policy communication, American Soybean Association.

Foster acknowledged that about 90% of steel from China is already restricted, but Delaney and Brosch both expressed concern about trade retaliation.

China is the number one export destination of US soybeans,taking about 34 million st/year according to Delaney.

Brosch pointed out that there was trade retaliation after President Obama decided to impose up to 35% tariffs on tires in 2009. At the time, China was the biggest importer of US poultry and after the Obama tire decision, China slapped a retaliatory duty on chickens. That duty remains and Brosch says the US poultry industry has "never gotten back" that Chinese market.

It was also noted that America's billion-dollar poultry industry would suffer "collateral damage" from tariffs, because steel-carrying ships that offload product inland -- and take goods back to the ports -- would "disappear from the heartland."

The contention is that poultry, grain, and other ag interests would face "drastically increased shipping costs," and reduced access to key export markets, because the burden of transportation would shift to their industries.

The Department of Commerce has two Section 232 investigations underway (in steel and aluminum); both began in the spring, and they aim to determine if imports threaten national security. The probes could result in the introduction of tariffs, duties or other measures.

Late last week, the chairman and president of the Metals Service Center Institute, R. Holman Head and Robert Weidner, respectively, sent a letter to President Trump urging "swift, decisive action on the Section 232 steel investigation to bring certainty to the marketplace."

In a statement today, Weidner said that letter noted "since the president announced the investigation last April, steel imports have surged, hitting a 29-month high in June, and are up 22% through July over the same period in 2016."

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

--Karen McBeth, karen.mcbeth@spglobal.com

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