Administration Hears Opposing Arguments on Section 232 Tariffs on Europe

A Republican senator said that even with three years of protectionist tariffs and quotas, the U.S. steel industry cannot meet demand, causing manufacturers that need steel to either curtail production or move production outside the country. In a Sept. 2 letter, Sen. Jerry Moran, R-Kan., told the commerce secretary and U.S. trade representative that lifting the tariffs on European countries' steel exports is a good first step, but that Japan and South Korea, too, should be given an opportunity to get relief, which in turn, should help alleviate the 400% increase in the cost of the metal this year. He said there will be a surge in demand if the infrastructure bill passes Congress, and the U.S. needs to prepare for that by lifting Section 232 tariffs and quotas.

The next day, the American Iron and Steel Institute, the Steel Manufacturers Association and the United Steelworkers union wrote to President Joe Biden to argue that exempting Europe from what started as global tariffs on imported steel would be a mistake, as the European Union is a contributor to global overcapacity, and they pointed to 22 antidumping and countervailing duty orders on EU steel products.

"[E]limination of the tariffs and quotas in the absence of concrete measures to eliminate excess capacity and the trade distorting policies that fuel this overcapacity would put the American steel industry at risk of another import surge, undermining these new investments and jobs," they wrote. They say that some European countries have announced "aggressive new subsidy programs for their steel industries, which will distort competition and exacerbate the ongoing excess capacity crisis."

They suggested that tariff rate quotas that are country- and product-specific would prevent a surge that would injure domestic steelmaking. "[I]t must be underscored that current steel imports from the EU contain steel that has been melted and poured in a number of non-EU countries," they wrote. "For example, millions of tons of semi-finished steel from Russia, Ukraine, China and elsewhere enter the EU every year to be rolled, finished, and exported -- all too often to the U.S. market. Such products finished in the EU from non-EU steel should not receive the benefits of any U.S.-EU agreement on steel trade."

The union and trade groups said it is good to cooperate with the EU to develop a carbon border adjustment regime. "But these forms of cooperation cannot substitute for maintaining effective trade measures against import surges, including from the EU, that jeopardize our production, national security, economic health, critical infrastructure and jobs."