Current tariffs prevent China, India and other countries from dumping hot-rolled steel in the United States, and a bipartisan group of U.S. Senators hope to keep it that way.
Senators Joe Donnelly, D-Ind., Dan Coats , R-Ind., and Dick Durbin, D-Ill., were among a group of 19 federal lawmakers who are urging the U.S. International Trade Commission to maintain existing tariffs against imports from China, India, Indonesia, Thailand, Taiwan and the Ukraine. The senators mostly hail from states where steel is forged, including Indiana, Ohio and Alabama.
The tariffs are reviewed every five years. The trade commission and the U.S. Department of Commerce are now looking at whether foreign companies are dumping subsidized steel in violation of international trade laws and if it is harming domestic steelmakers, said ITC spokeswoman Peg O'Laughlin.
The group of senators, who include Al Franken, D-Minn., and Lindsey Graham, R-S.C., argue in the letter such tariffs are needed to prevent further harm to the already struggling steel industry.
"While the economy is growing slowly, the U.S. hot-rolled steel industry is in substantially worse condition than it was when the commission last considered these trade remedies five years ago," the letter stated. "The recent financial performance of domestic hot-rolled steel producers confirms that production and capacity utilization rates are down, and the industry's rates of return are wholly inadequate to justify future investment. Moreover, U.S. demand for hot-rolled steel remains weak and the overall health of the U.S. and global economy is unstable."
Most of the major steelmaking and steel-finishing facilities in Northwest Indiana produce hot-rolled steel, among other types of the metal. Hot-rolled steel is one of the industry's biggest products, and it is used by automakers, tube manufacturers and the construction sector.
U.S. steel mills had a capacity utilization rate of 75.8 percent last week, according to the American Iron and Steel Institute. That means that about a quarter of domestic steel operations are idle because there is not enough demand for more production.
The senators are concerned global overcapacity in the steel business continues to grow. Repealing anti-dumping trade orders likely would lead foreign steelmakers in China and other countries to dump steel at margins between 4.4 percent and 90.8 percent, but with government subsidies that would widen their margins to more than 500 percent.
"Given the current state of the domestic industry and the ability of producers in China, India, Indonesia, Thailand, Taiwan and Ukraine to send significant quantities of hot-rolled steel to the U.S. market, removing the existing trade orders would harm the domestic industry and its workers," the letter stated. "As a result, we strongly urge you to maintain the existing orders against dumped and subsidized imports of hot-rolled steel."
The American Institute for International Steel, an industry associate that advocates for free trade, has decried domestic steelmakers' support for tariffs. Slapping duties on foreign imports will not help domestic steelmakers such as U.S. Steel, said president David Phelps.
"Government-sponsored trade protection has never solved demand-related market weakness, and it will not now," he said.