Commerce to Begin Section 232 Investigation Into Electrical Transformer Steel Imports

Secretary of Commerce Wilbur Ross will begin a Section 232 investigation into whether U.S. imports of “laminations for stacked cores for incorporation into transformers, stacked and wound cores for incorporation into transformers, electrical transformers, and transformer regulators” threaten national security, the Commerce Department said in a May 4 news release. Commerce received “inquiries and requests from multiple members of Congress as well as industry stakeholders,” it said. The Bureau of Industry and Security will conduct the investigation and request comments in a coming notice, it said.

“Transformers are part of the U.S. energy infrastructure,” Commerce said. “Laminations and cores made of grain-oriented electrical steel are critical transformer components. Electrical steel is necessary for power distribution transformers for all types of energy -- including solar, nuclear, wind, coal, and natural gas -- across the country. An assured domestic supply of these products enables the United States to respond to large power disruptions affecting civilian populations, critical infrastructure, and U.S. defense industrial production capabilities.”

Ross will notify the secretary of Defense of the investigation, as required, Commerce said. “The Department of Commerce will conduct a thorough, fair, and transparent review to determine the effects on the national security from imports of laminations for stacked cores for incorporation into transformers, stacked and wound cores for incorporation into transformers, electrical transformers, and transformer regulators,” Ross said.

Jennifer Hillman, a former commissioner on the International Trade Commission and senior fellow for trade at the Council on Foreign Relations, said that while she’s glad the administration is at least following the process this time to extend the Section 232 steel tariffs to downstream products (see 2001250003), she doesn’t think this will work. “If companies need steel and they can’t get it domestically, and they can’t afford to pay the tariffs, then they have no chance than to move downstream … and manufacture outside the United States,” which is what buyers of transformers are doing by sourcing cores in Canada.

AK Steel has been complaining about this trend for years. Hillman said she knows there have been many antidumping cases over the years on GOES, and the domestic producer has not found them effective, but, she said: “The problem with this is at what point do we stop? Do we keep going downstream, downstream, downstream, downstream?”