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American Institute For International Steel Warns Trump On Tariffs

Joining a broad swath of business interests, the American Institute for International Steel (AIIS), a trade association that represents steel importers, distributors, fabricators and processors, called on President Trump in a February 8 letter to halt his administration’s consideration of heavy tariffs on foreign-produced steel and aluminum, arguing that they would do more harm than good. AIIS prides itself on being “the only steel-related association that supports free trade.”

On February 15, the Commerce Department recommended heavy tariffs and quotas on steel and aluminum imports. The recommendations include a 24 percent global tariff on steel imports, or a charge of at least 53 percent on steel from a dozen countries. Commerce recommended a 7.7 percent tariff on aluminum imports, or a 23.5 percent tariff on aluminum products from China, Hong Kong, Russia, Venezuela and Vietnam.

Domestic Profits

Most business interests insist that the proposed tariffs are addressing a non-existent problem. They point out that domestic steel producers are enjoying strong demand and posting solid profits. The earnings of steel innovator Nucor, for example, rose by two-thirds in 2017 to $1.3 billion, even despite a 35 increase in the price of the scrap metal from which it makes its steel.

In its letter, the AIIS warns that the proposed tariffs would result in harm to millions of jobs and would work against other Trump moves that have helped the economy.

“During the past year, you and your administration have led the United States into an era of robust economic expansion, low unemployment, and a booming stock market. Taking a smarter approach to regulations, reforming the tax code and implementing other pro-growth policies has restored this nation to its rightful place as the world’s economic powerhouse. We urge you not to allow the Commerce Department’s recently completed report on the Section 232 investigation of the impact of steel imports on national security to put these achievements at risk,” said the letter, signed by AIIS President Richard Chriss.

“Imported steel does, indeed, have an effect on the national security of the United States–a positive one. The global steel market means that defense and weapons systems, as well as national critical infrastructure, can be procured and built at more competitive prices, making it possible for the United States to provide its troops with more armored vehicles, guns and protective plates.

“And no international crisis would threaten the supply of steel to this sector. Domestic manufacturers have 75 percent of total market share, and defense and homeland security accounts for only about 3 percent of the nation’s consumption of steel produced stateside. Plus, the vast majority of imported steel comes from friendly countries such as Canada, Brazil and the members of the European Union.”

Cites Steel Port Activity

The AIIS letter cites a 2017 study from Martin Associates that found that steel port activity supports 1.3 million jobs and $240 billion of economic activity. “Imposing new tariffs or quotas on steel imports would have an immediate negative impact on many Americans whose paychecks depend on the steel trade. It would almost certainly invite retaliation by other countries. As history shows, tit-for-tat trade retaliation never ends well. There are no winners. Such an outcome would pose a major threat to global stability and security.”

Trump’s tariff moves, however got a strong, and rare, endorsement from the United Steelworkers’ Union.  The USW’s president, Leo Gerard, said in a letter, “It is absolutely clear from today’s release of the Section 232 Aluminum and Steel Reports that Department of Commerce Secretary Wilbur Ross has a comprehensive understanding of the unrelenting attacks and challenges that these industries critical to our nation’s security are facing from unfairly traded imports. We also commend the DOC’s interpretation of the 232 statute’s definition of national security to include critical infrastructure.”

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