Steel Summit 2024: Trade issues abound ahead of election

The topic was Steel for Change: What Shifting Trade Policies and Nov. 5 Mean for Your Business. And the discussion was lively. Here are some snippets of the panelists’ views on a host of issues.

Bell on USMCA

With tension in the air with Mexico regarding steel imports, and how manufacturing will be situated in the USMCA area, SMA’s Bell laid out a three-point plan for better relations with the States’ southern neighbor.

First, the US should make sure all parties are cooperating with the spirit of the USMCA. An important aspect of that is transparency, he said.

“We have to monitor our imports from Mexico,” commented Bell. They need to comply with USMCA requirements, including being “melted and poured” within the USMCA area. This will help make the area an even more powerful trading bloc.

Bell also spoke about “maquiladoras,” the factories that line the US/Mexico border on the Mexican side. The US should make sure that “the parts they use and the skills they use come from the USMCA region.“

Dempsey on decarb and China

The US steel industry is the cleanest in the world, AISI’s Dempsey said. But a threat to its progress could be dumped steel from China and other less environmentally friendly nations.

He pointed out that, notwithstanding the overcapacity today, there are almost 100 million tons of new capacity coming online in the next couple years in Southeast Asia and India, “most of which is very high in carbon emission, so there’s a real threat.”

“That’s why we think it’s really important to incorporate climate policy into trade policy, and to begin looking at how can we develop a carbon tariff system that accounts for the differential carbon emissions between steel made in the US and made in other parts of the world,” Dempsey said.

Price on Vietnam

The Commerce Department recently ruled that Vietnam has retained its status a “non-market economy.” Wiley Rein’s Price was asked what this meant for the US steel industry. (He also wrote a column on this topic in SMU here.)

Price said that Vietnam’s economy has grown a lot over the last decade, “and a lot of that growth has been, frankly, a product of China.”

“And as we impose tariffs on China, you see Chinese industries relocate their manufacturing processes to Vietnam,” he said.

Additionally, he noted that Vietnam doesn’t work on “standard, conventional Western market principles, and has really just become a satellite of China in many, many economic respects.”

The Commerce ruling affects the way dumping margins are calculated. Price said the ruling is important because it won’t encourage China to move further productive capacity into Vietnam.

“So it’s quite important. It’s important for US manufacturers. It’s important for maintaining useful and viable trade laws with Vietnam,” Price added.

Leibowitz and the consumer perspective

As a trade attorney, Leibowitz pointed out that he takes a consumer angle on many issues, rather than a mill perspective. He emphasized that it’s important to consider that side of the coin.

“I may be alone up on the stage. … But I think I have a lot of friends out there who are the rest of the economy, besides steel production, and they get inadequate consideration, at least lately, in terms of the specific remedies that are that we’re going to discuss,” he said.

Leibowitz remarked that trade issue are very complex. He said it’s important to balance the interests of steel producers, steel consumers, steel processors, and general manufacturers “so they don’t move offshore and reduce the demand for steel.”

Election

Of course, November 2024 is just a couple of months away.

Regarding the two candidates, Leibowitz said there seems to be more “flexibility” with Democratic nominee, and current vice president, Kamala Harris. Recall that it was President Trump who put in place Section 232 tariffs in 2018. (This was before Harris came out against the U.S. Steel/Nippon deal.)

Both Bell and Dempsey pointed out that between the Trump and Biden administrations there was a lot of continuity when it came to trade policy and steel.

Dempsey said the continuity is “driven by the problems these policies are designed to address.” He thinks the Section 232 tariffs will be maintained no matter who is elected for that reason.

Price broadly agreed with both Bell and Dempsey. He pointed out there is an “unknown” factor with Harris because she hasn’t said a lot about trade, and it’s not one of her cornerstone issues.

Still, Price added, “You see a continued recognition that these problems are far broader than industry-specific problems, and and that’s really building out now.” The same issues confronting steel, for example, are echoed in industries as diverse as honey and seafood, he said.