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News from EPI Trump administration should take swift action to support U.S. steel and aluminum manufacturers

In April 2017, President Trump ordered the Commerce Department to conduct special “Section 232” national security investigations into the U.S. steel and aluminum industries, which have been hurt by global excess production capacity and unfair trade by China and other countries. The results of these investigations were recently sent to the president, who has 90 days to decide on any potential action. In a new policy memo, Director of Trade and Manufacturing Research Robert E. Scott argues that these investigations present an opportunity to develop global, industrywide solutions to rising excess capacity and unfair trade, which have become chronic problems in these industries over the past few decades.

Relief from unfairly subsidized imports and excess capacity is sorely needed to help save jobs in steel and aluminum. The Trump administration, Scott argues, should act promptly to impose tariffs and quotas on a broad range of steel and aluminum products from the countries responsible for global excess capacity. Any actions by the administration must reflect a broad and appropriate definition of national security, which should include the electrical grid, pipelines, and disaster preparedness.

“The administration’s trade policies amount to all talk and no action, and this failure to act has been costly,” said Scott. “Nowhere is that more clear than the prolonged steel and aluminum investigations, which have yet to result in any concrete trade policy actions. Surging imports and unfair trade have decimated U.S. steel and aluminum producers, leaving our military and infrastructure at risk.”

Scott argues that the costs of trade relief have been vastly over-estimated and there is little risk that such measures would ignite a trade war with China or other unfair traders. The administration could use the threat of tariffs or quotas to encourage joint action with other countries to address excess production. They could announce global tariffs on all steel imports, but offer to change the structure of those tariffs if other countries agreed to a joint plan to crack down on global excess capacity and unfair trade.

“To be effective, the solution must cover a broad range of steel categories and unwrought aluminum products,” said Scott. “The remedies must result in a joint, international plan to crack down on excess global capacity and unfair trade in order to restore steel and aluminum prices to market sustaining levels, and actually help workers in the U.S. steel and aluminum industries.”