Trump Orders Investigation of Steel Imports Based on National Security Concerns

This is not the first time a Secton 232 investigation has occurred. There was an investigation ordered back in 2001 shortly after 9-11. At that time, Commerce found that steel is not a product needed for national security issues. Steel Market Update spoke with trade attorney Lewis Leibowitz this afternoon and he told Steel Market Update: “The President has ordered Secretary Ross to conduct an investigation into the impact of steel imports on national security.  The fact sheet (I have not seen the memorandum ordering the initiation of the investigation) indicates that the period of investigation and reporting could be much shorter than the 270 days provided in the statute.  It could be 30 days or less.

“There is no guarantee of the result of Secretary Ross’ investigation. However, precedent does not support using 232 to restrict steel imports.  They are not vital to national security.  Most recently in 2001, the Commerce Department found that imports of iron ore and semifinished steel did not jeopardize national security because a miniscule amount of finished steel was actually used for national security products made from steel.  Since 2001, that quantity has undoubtedly diminished (for example, in Iraq armored vehicles chiefly used aluminum rather than steel because of weight).” 

Here are comments from the White House including their Fact Sheet which answers many of the questions being posed by the steel industry this afternoon:

A JUSTIFIABLE AND NECESSARY ACTION: As imports of steel to the United States continue to rise, an examination of foreign practices is urgently needed.

• Despite America’s own existing domestic steel industry, imports of steel into the United States have risen 19.6 percent between February 2016 and February 2017.
• Recent reports by the United States International Trade Commission (USITC) have found that the United States steel industry is injured by foreign imports.
  • The USITC has found harm to domestic steel makers where nations which export steel to the United States unfairly subsidize these products or sell them at artificially low price.

TAKING STEPS TO PUT AMERICA’S STEEL INDUSTRY FIRST: President Donald J. Trump is taking action to ensure America’s steel industry comes first, in addition to the steps taken through his Buy American and Hire American policies.

• Today, the President signed a Presidential Memorandum prioritizing an investigation of the harm caused to the national security of the United States from steel imports.
  • The investigation is being conducted under Section 232 of the Trade Expansion Act of 1962.
• The Secretary of Commerce is directed to expedite his investigation of the effects of steel imports on U.S. national security to determine the following:By law the investigation must be concluded and a report submitted within 270 days.
  • If steel imports cause American workers to lose jobs needed to meet security requirements of the domestic steel industry.
  • Any negative impact on Government revenue from steel imports.
  • Any harm caused to the economic welfare of the United States, considering the close relationship to national security. 
• By law the investigation must be concluded and a report submitted in 270 days.
• Based on the report, the President will determine and issue necessary actions, including possible tariffs, to ensure that steel imports no longer threaten U.S. national security.

KEEPING HIS PROMISE TO THE AMERICAN PEOPLE: President Trump promised that he would scrutinize U.S. steel imports and seek a revitalization of the American steel industry.

• Then-Candidate Trump: Foreign nations are “dumping vast amounts of steel all over the United States, which essentially is killing our steelworkers and steel companies.”
• Then-Candidate Trump: promised that “we will put new American steel into the spine of this country.”
• Then-Candidate Trump: “We’re going to use American steel, we’re going to use American labor, we are going to come first in all deals.”

FACT SHEET

Section 232 Investigations: The Effect of Imports on the National Security

Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862) authorizes the Secretary of Commerce to conduct comprehensive investigations to determine the effects of imports of any article on the national security of the United States. Section 232 investigations include consideration of:

• domestic production needed for projected national defense requirements;
• domestic industry’s capacity to meet those requirements;
• related human and material resources;
• the importation of goods in terms of their quantities and use;
• the close relation of national economic welfare to U.S. national security;
• loss of skills or investment, substantial unemployment and decrease in government revenue; and
• the impact of foreign competition on specific domestic industries and the impact of displacement of any domestic products  by excessive imports.

Section 232 requires that the Secretary notify the Secretary of Defense that an investigation has been initiated. The Secretary also consults with the Secretary of Defense regarding methodological and policy questions raised in the investigation and can seek information and advice from other government agencies.

The Secretary’s report to the President, prepared within 270 days of initiation, focuses on whether the importation of the article in question is in such quantities or under such circumstances as to threaten to impair the national security. The President can concur or not with the Secretary’s recommendations, and, if necessary, take action to “adjust the imports of an article and its derivatives.” In addition, the Secretary can recommend, and the President can take, other non-trade related actions necessary to address the threat.

Since 1980, the Commerce Department has conducted fourteen Section 232 investigations. Past investigations and remedies have included the following:

• Integrated  Circuit Ceramic Packaging  – 1992
• Defense  provided  research and development  funding for industry
• Antifriction Bearings – 1988
• Implementation of Buy American restrictions on super precision bearings for jet engines and miniature and instrument precision bearings for guidance systems
• Metal Cutting and Forming  Machine Tools  – 1986
• Voluntary restraint agreements with multiple countries on imports and an aggressive domestic industry competitiveness action plan

For more information about Section 232 investigations, please visit: www.bis.doc.gov/232