Why Are U.S. Steel Imports Spiking This Year?
The latest statistics, as made available by the American Iron and Steel Institute, show that through the first nine months of 2017, total and finished steel imports into the United States are up 19.6 percent and 15.7 percent, respectively, as compared to the same period in 2016. On an annualized basis, 2017 steel imports would be 39.6 million tons total and 30.5 million tons for finished products, up 19.8 percent and 15.9 percent, respectively against 2016.
Why the spike in steel imports? Ironically, it was a reaction to an initiative undertaken by President Donald Trump that was supposed to protect the domestic steel industry.
In early April, the US Department of Commerce undertook an investigation of steel imports under Section 232 of the Trade Act, focusing on whether they represent a threat to national security. Later that month, President Donald Trump ordered the department to complete its report on an expedited timetable. By Trump’s standard, the department’s findings are now five months overdue. Commerce’s report will make recommendations, but the ultimate decision to impose trade measures under Section 232 is the president’s.
Later, Trump backpedaled on the hurry-up timetable, telling the Wall Street Journal that “we don’t want to do it at this moment” and that he was “waiting till we get everything finished up between healthcare and taxes and maybe even infrastructure” before he makes a decision on steel trade policy. That will no doubt bring us to January 15, which is the statutory deadline for the Commerce Department to submit its Section 232 report, unless the investigation is scrapped before then. Press reports over the summer indicated that the department already had a draft of the report ready, although nothing of its contents was made public.
It’s apparent that the increased level of steel imports is connected with the desire of importers to make sure they had their supplies on hand before the Commerce Department and the president lowered the boom, if in fact that was to be their decision.
The most significant data that points in that direction is that finished steel import market share peaked in June, around the time of Trump’s accelerated Section 232 deadline, when it was over the 30-percent mark. Finished steel import market share was an estimated 27 percent in September and is estimated at 28 percent for the first nine months of the year.
U.S. steel producers couldn’t be blamed for thinking Trump would come to their aid, based on the president’s rhetoric, not only on the campaign trail, but also after taking office. “Wait till you see what I’m going to do for steel and your steel companies,” Trump said at a political rally in Cincinnati in June. “We’re going to stop the dumping and stop all of these wonderful other countries from coming in and killing our companies and our workers. We’ll be seeing that very soon. The steel folks are going to be very happy.”
U.S. steel producers are still hoping for Section 232 action as they addressed the issue during earnings calls with analysts and journalists in recent days. “Nucor continues to believe significant work remains to be done to achieve free and fair trade for U.S. manufacturers,” said Nucor CEO and Chairman John Ferriola during such a call. “More specifically, it’s time for comprehensive and broad-based remedies that address the illegal foreign trade practices that have materially weakened our nation’s economic vitality.”
Ferriola’s assessment came despite the fact that Nucor recently reported its highest year-to-date earnings since 2008.
Under the original Trade Act deadline, the Commerce Department’s report will be due on January 15, 2018, unless the whole operation gets scrubbed. To quote Trump, “We’ll see what happens.”