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Watch: US demonstrates allegiance to aluminum, steel through import investigations

While the Trump administration has been cozying up to steel, it's also showed some love for another sector: aluminum. Love is a battlefield, and the administration announced the deployment of a seldom-used weapon in the war against imports: a Section 232 investigation, used to determine whether imports could impact national security. Joe Innace considers whether the investigations are the whisperings of sweet nothings or the start of a more serious relationship. Further, could Canada find itself in the spotlight, and could prices be affected?

Read more details about the US initiating a Section 232 probe on steel imports' impact on national security, and then read our analysis of what Trump's steel directive means for US national security.

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

View Full Transcript

Video Transcript

US demonstrates allegiance to aluminum, steel through import investigations

By Joe Innace, content director, Americas metals

Welcome to The Snapshot, a series examining the forces shaping and driving global commodities markets today.

In my last Snapshot video, I talked about how the Trump Administration was showing great affection for American steel producers.

Guess what? Since then, that infatuation has turned to passion.

Trump has consistently been saying things to make the US steel industry feel appreciated. During his first 100 days, Trump delivered on many campaign promises — if not legislatively — but by signing executive orders and memoranda related to steel.

The president has been executing on the trade front. He withdrew from the Trans-Pacific Partnership—an action that filled American steelmakers with glee, and he signed an executive order to beef up trade enforcement at the borders and improve the collection of duties.

Now, any relationship hits some bumps. And on April 12th, President Trump said he would not name China a currency manipulator. Big steel did not like that — some thought he’d lost that loving feeling, but overall, steelmakers still stood by their man.

And about a week later, their loyalty was rewarded. On April 20, proving love is a battlefield, Secretary of Commerce Wilbur Ross announced the deployment of a seldom-used weapon in the war against imported steel — a Section 232 investigation.

Section 232 investigation is used to determine impact of imports on national security

Section 232 is part of the Trade Expansion Act of 1962 and is used to determine the impact of imports on national security. But while Trump was cozying up to steel, his eye was wandering to another metal. And the next week, a Section 232 investigation was also announced for …

…US aluminum.

Section 232 investigations ordered for both steel and aluminum

To be clear: Import restrictions of steel and aluminum on the grounds of national security have not yet been ordered by the US. What has been ordered are two investigations to assess the respective situations. This could turn out to be the whispering of sweet nothings, or it could turn out to be an everlasting love triangle featuring the Administration, steel and aluminum.

Potentially complicating the relationship: Substantially more primary aluminum is produced in Canada than in the US — and there is a lot of cross-border trade.

At the steel briefing, Ross emphasized that the net effect of any tariffs, if it came to that, would not be to prohibit foreign imports. Rather, he said, it “will be to change the price.” But a change in prices, however dotingly motivated, can be a slippery slope. And it’s important to remember that steel and aluminum are globally traded commodities. In an ideal world, their prices are determined by natural market forces. And when governments intervene with duties and tariffs, well, sometimes you can’t hurry love.

Until next time on the Snapshot — we’ll be keeping an eye on the markets.