Steel executives suggest openness to quotas instead of tariffs on some imports

An ArcelorMittal Riverdale steelworker monitors a hot strip of steel during the descale process. Steel executives told the Congressional Steel Caucus that Section 232 protections remain essential but suggested that would be open to hard quotas instead of tariffs on imports from Canada and Mexico, which the administration has suggested as it negotiates a new trade deal.

Steel executives told the Congressional Steel Caucus at its annual hearing last week that 25 percent tariffs on steel imports were helping to revive the long-struggling industry, but said they were open to the administration's suggestion that some tariffs could be replaced with quotas.

“As long as mechanisms exist to limit the possibility of transshipment, we support replacing 232 tariffs on Canada and Mexico with quotas,” ArcelorMittal USA President and CEO John Brett said. “Implementing a melted and poured provision could be one way to address circumvention concerns.”

A year ago, the United States imposed Section 232 tariffs of 25 percent on all foreign-made steel, which is credited with raising steel prices, boosting revenues and helping steelworkers land new contracts with their first raises in years. A U.S. trade representative suggested tariffs could be lifted on Canada and Mexico in favor of quotas that would cap the amount of steel the United States could import from them, as the three countries work to negotiate a new North American trade deal.

U.S. Steel CEO David Burritt, testifying at the State of Steel hearing in Washington D.C., said the U.S. steel industry remains vulnerable. He said a quota system could work so long as it was strictly enforced.

"The Section 232 must continue to be applied to all steel producing countries, especially the top import sources — whether that is a tariff or hard quota," he said. "Even our best allies and their steel producers have been found to dump and subsidize steel imports into the USA, and they can be conduits for foreign steel from China, Russia and elsewhere. If the Section 232 doesn’t apply everywhere, it’s nowhere as border leaks will continue from global excess capacity."

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Burritt said the tariffs have strengthened the domestic steel market enough where U.S. Steel is hiring at all locations and making significant investments.

"In Granite City, Illinois, we’ve restarted two blast furnaces and steelmaking operations that had sat idle since 2015. Today, there are 800 skilled workers again making steel — up to 2.7 million tons per year," he said. "In Gary, Indiana, we announced an investment of at least $750 million in our steelmaking assets — part of a $2 billion company-wide asset revitalization program. In Lone Star, Texas, a tubular mill shuttered permanently in 2016 is being brought back to life. By this summer, 140 new workers will be producing high-quality products for American oil and gas producers."

U.S. Steel resumed construction of an electric arc furnace capable of making 1.6 million tons in Fairfield, Alabama, where it will hire 150 steelworkers. The steelmaker also is building a $400 million continuous galvanizing line in Leipsic, Ohio.

But all of that depends on the U.S. steel market remaining robust.

"No one should be lulled into thinking the job of the Section 232 is complete because the U.S. industry has touched an 80 percent capacity utilization level for a few weeks — a level it hasn’t reached in a decade," Burritt said. "This is not a temporary peak to be climbed, celebrated and abandoned — it’s a plateau to be sustained as the bare minimum level necessary for the industry to survive to make additional investments to modernize so it can supply our country over the long-term."


Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.