op-ed

Putting American Steel Workers First

In April, President Trump and Commerce Secretary Wilbur Ross announced that they would begin an investigation into whether steel imports threaten U.S. national security pursuant to Section 232 of the Trade Expansion Act of 1962. This announcement was an important signal that the Administration would not tolerate further erosion of the steel industry, which provides vital inputs to U.S. national defense and is critical to U.S. industries and infrastructure.

Unfortunately, given the expectations of swift, decisive action by the end of June, imports have flooded the market to avoid the anticipated response. With each decision to delay, the American steel industry suffers even more than it already has.

The Department of Commerce is expected to soon release an intermediary report recommending that President Trump provide relief to American steelworkers to ensure national security. While this is progress, the Administration must proceed quickly and give a decisive response under Section 232, if it is to fulfill the President’s promise to American steelworkers and prevent further damage to a domestic industry whose domestic vitality is increasingly threatened by foreign actors.

The U.S. steel industry’s output is more than 22 million tons lower than it was prior to the financial crisis. Capacity utilization rates since 2009 have been unsustainably low, fluctuating between approximately 70% and 75%. And its financial performance has been abysmal, as imports, largely subsidized by foreign governments, have driven down prices. Hardworking Americans are losing jobs as a result. In the last 18 months, more than 14,000 steel industry jobs have been lost.

And now the crisis has reached a breaking point. Through the first six months of 2017, finished steel imports increased by an estimated 17.5% compared to the same period last year. Despite the announcement of the Section 232 investigation in April, the estimated finished steel import market share in June matched the record annual level at 30%.

This is problematic for all Americans. The American steel industry is the bedrock of American manufacturing, and without a healthy steel industry, there cannot be a healthy manufacturing industry or a means of ensuring our nation’s defense. Our great country needs a secure domestic supply chain, and we cannot rely on foreign nations for the raw materials to produce items that we need for U.S. national security. It is simply not possible for any nation, including the U.S., to be a superpower without a strong domestic steel industry.

China and other nations close their markets to American steel exports and massively subsidize their domestic steel industries.

Steel builds the ships and armored vehicles that carry our sailors and soldiers, and it builds the cars that 90% of Americans drive to work every day. Steel is also what will support the president’s aggressive infrastructure program. An estimated 50 million tons of steel will be needed over a ten-year period for a trillion-dollar infrastructure program. Steel is essential to ensuring both our national security and our economic vitality.

While the investigation from the Commerce Department is certainly progress, without decisive action, the industry will continue to be exposed to import surges that put it at risk of collapse. The fallout will extend beyond America’s 140,000 steelworkers to reach all Americans, including the ones who put their lives at risk to protect our country.

The cornerstone of President Trump’s campaign was his vow to put American workers and American interests first. Decisive action under Section 232 to ensure the survival of the American steel industry will be a critical demonstration of the President’s commitment to follow through on this promise. Delay is no longer an option if he wishes to do so.

Ian Fletcher was Senior Economist of the Coalition for a Prosperous America, an organization dedicated to reforming American trade policies, and is currently a member of CPA’s advisory board.


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