Carriers, ports fear impact of US steel protectionism
This story originally published on JOC.com.
The global steel industry is under a sword of Damocles that threatens to produce a trade war between the United States and some of its biggest trading partners in Europe and Asia.
The threat has been building since the Trump administration raised the likelihood of protectionist measures on steel imports in response to complaints by domestic producers that global overcapacity and cheap foreign steel endanger US national security.
Breakbulk carriers and ports have a direct stake. Steel accounts for 9.5 percent of US breakbulk volumes by dollar value, Drewry Maritime Research estimates, and is a primary commodity at ports including Houston; New Orleans; Mobile; Brownsville, Texas; and on the Delaware River.
Steel buyers warn that tariffs or other protectionist measures aimed at imported steel will raise costs for steel users, including automakers and other manufacturers, and the construction industry.
As the Trump administration ratcheted up talk of steel import tariffs, other nations raised the prospect of retaliation. European Union trade commissioner Cecilia Malmström warned that the European Union was "making preparations" to retaliate against US tariffs and would study any US action to see whether it complies with World Trade Organization rules. Malmström said any general US measure to limit steel imports would affect Europe dramatically, potentially threatening numerous EU jobs.
Steel has figured prominently in President Donald Trump's protectionist rhetoric. During last November's election, his promise to revive US steelmaking was credited with helping him win key states such as Ohio and Pennsylvania.
The US Commerce Department began an investigation in April under the seldom-invoked Section 232 of the 1962 Trade Expansion Act, an emergency wartime provision that allows the executive branch to decide whether cheap steel imports undermine the domestic steel industry's capability to manufacture enough steel to make military equipment such as tanks and ships. US defense industries consume 0.3 to 0.5 percent per year of the total domestic US steel output.
The Commerce Department's recommendation under Section 232 gives the president the power to impose protectionist measures without reference to Congress or any other restrictions.
Commerce secretary Wilbur Ross, who made part of his fortune investing in US-based Bethlehem Steel and LTV Steel, has been the administration's most prominent advocate of steel protection, and urged the president to take "bold action."
Chief executives of some of the largest US steelmakers, including Nucor's John Ferriola and AK Steel Holding's Roger Newport, warned in May that the United States must take measures against the flood of steel manufactured by China and other nations that provide state support to the industry.
Although US domestic steel prices are among the highest in the world, domestic steelmakers still blame China for their woes. "Chinese steel is the boogeyman, but it is almost completely irrelevant," said John Anton, director of steel analytics at IHS Markit.
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