The blanket Section 232 tariffs of 25% on most foreign-made steel helped lift up the U.S. steel industry and should be left in place, a new report from the Economic Policy Institute found.
The study by the Washington, D.C.-based think tank found the tariffs improved the domestic steel market, spurred $15.7 billion in investment and created 3,200 new steelworker jobs since imposed in 2018. The tariffs cut imports by 27% without any meaningful impact on the prices of products made with steel, such as cars, trucks and SUVs.
“The USW welcomes the EPI’s rigorous research into the impacts of the steel 232 measures and the dire consequences of lifting them prematurely," United Steelworkers President Tom Conway said. “Tens of thousands of USW members depend on a robust U.S. steel industry for good, family-sustaining jobs, doing vital work that helps ensure our national security. Our members take pride that our steel is used in military vehicles such as tanks, ships and airplanes, as well as supplying the components that make up our nation’s critical infrastructure."
Conway said the tariffs remained crucial to protect U.S. steel mills and good-paying steelworker jobs given the fragile economic recovery from the COVID-19 pandemic.
“Excess global steel capacity also remains a significant problem, as it was before the Section 232 measures were enacted," he said. “It is imperative that these protections remain in place until the administration is able to find a permanent, multilateral, enforceable solution to address steel overcapacity and unfair trade.”
“For decades, global steel supply surpluses have undermined the U.S. steel industry with surging imports to U.S. markets undercutting prices, domestic production, employment and investments. This oversupply jeopardizes the fundamental health of the U.S. steel industry — one of the cleanest and most energy-efficient steel industries globally,” said Robert E. Scott, EPI’s director of trade and manufacturing policy research, who co-authored the report. “The Biden administration should maintain the import restraints on steel until they can reach a multilateral solution.”
The study found the U.S. steel industry supports 2 million jobs that pay 27% more than the median earnings for men and 58% more than the median for women on average.
“Short of a multilateral solution to chronic excess capacity, Section 232 measures help preserve an industry critical to the U.S. economy,” said Adam S. Hersh, director of Washington Global Advisors LLC, who co-authored the report.
The report also found a robust domestic steel industry was vital to maintaining national security and the nation's infrastructure.
“I thank the Economic Policy Institute for their thorough investigation and timely analysis of the benefits of maintaining the current Section 232 steel tariffs. The ability of domestic steelworkers and steel producers to provide for our national economy and national security is of paramount importance," said U.S. Rep. Frank Mrvan, D-Highland. "We are fortunate that the Section 232 provisions were in place prior to the start of the health pandemic, and this report amplifies that this relief remains essential to our nation’s road to recovery. I will continue to work alongside my colleagues to ensure that American steel companies and American steelworkers can compete on a level playing field.”
The study found excess capacity in major exporters of often state-supported steel such as China, India, Brazil, Korea, and Turkey. Excess capacity worldwide is six times the production capacity of the U.S. steel industry, according to the Organization for Economic Co-operation and Development.
The American Iron and Steel Institute, the Washington D.C.-based trade association representing U.S. steelmakers, said the study showed why the tariffs were still needed and that the U.S. steel industry still faced a threat from global overcapacity fueled by foreign government subsidies.
“This study makes it abundantly clear that the steel tariffs are working. We commend the economic analysis conducted by EPI which confirms that, due largely to the Section 232 steel tariffs, the American steel industry has been able to invest nearly $16 billion to build, upgrade or expand steel facilities while also enabling the industry to effectively restructure," President and CEO Kevin Dempsey said. "While these investments have created 3,200 new jobs, the tariffs kept many more workers on the job as the industry was threatened by significant challenges from foreign government trade-distorting policies and practices that have created substantial steel overcapacity worldwide. We are pleased that the report also recognizes that those challenges still exist and that keeping the steel tariffs in place is critical until a permanent solution to the chronic problem of excess global steel production capacity is achieved. We urge that opinion leaders, policymakers and steel partners all across the U.S. take a look at this important new report and work to ensure that steel tariffs remain in place.”