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U.S. President Donald Biden’s promise to end the trade war with Europe after four years of transatlantic tensions under Donald Trump’s leadership is being strongly opposed by the U.S. steel industry.
Due to soaring commodity prices and industry consolidation, American steel mills have prospered in the past year.Another factor in their favor is the 25% tariff imposed by the Trump administration. place Imported steel in 2018.
European officials want to eliminate tariffs. The Biden administration said last week that it hopes to reach an agreement with the European Union on the issue before the end of this year in Brussels. Delayed upgrade Impose retaliatory tariffs of at least 50% on US goods including bourbon and Harley-Davidson motorcycles.
But to satisfy Europe, it is possible to infuriate the politically powerful steel industry in the United States, including steel mills in Indiana, Ohio, and Pennsylvania.
Paul Sracic, a professor of political science at Youngstown State University in Ohio, said: “Steel is a powerful word that symbolizes the power of the United States and is regarded as the fundamental industry of the United States.” He said that tariffs should be eliminated. Will be “really difficult politically.”
Europe’s retaliatory tariffs are a response to the so-called Section 232 tariffs introduced by the Trump administration on national security grounds. The tariffs also include a 10% tariff on aluminum imports.
Although Brussels’ announcement last week heralded potential delays, the US steel industry is already lobbying the president to maintain tariffs. Last week, industrial groups and the steel workers’ union sent a letter to Biden that the removal of tariffs would “damage the viability of the US steel industry”, which they said was threatened by steel mills subsidized by the Chinese government.
The steel market is rising rapidly, and US prices are higher than similar steels in Europe. According to data from S&P Global Market Intelligence, the stocks of US steelmakers such as Nucor, Cleveland-Cliffs, Steel Power, and U.S. Steel have more than doubled in the past year.
U.S. steelmakers believe that this rise is part of a broader boom, and that it drives up prices of products including timber, semiconductors and agricultural products, rather than Trump’s tariffs.
“We have gone from a situation where demand is almost zero and there is no backlog of inventory, to a situation where the economy has actually weathered the pandemic better than people imagined, and there are many pent-up demand not only for steel, but It also applies to many other commodities.” said Phil Bell of the American Steel Manufacturers Association.
Steel users want Trump to remove tariffs. The U.S. Chamber of Commerce, one of Washington’s most powerful business groups, stated that the soaring steel prices have posed serious challenges for American manufacturers that use steel as raw materials.
Last week, about 300 smaller U.S. companies wrote to Biden requesting the removal of tariffs, saying that compared with similar products in Europe, U.S. companies paid 40% higher prices for similar steel products, and the delivery time was 6 weeks. Extend to 20 weeks.
The organization stated: “If tariffs are not abolished, if Washington continues to advance an infrastructure bill to invest in the United States, this situation will worsen, because these projects will put greater pressure on domestic steel and aluminum supplies, leading to construction. Delays and risked manufacturing work,” wrote.
Those in the steel industry who support tariffs are still open to the idea that Biden can reduce tariffs in exchange for Europe to fight for more action to combat China’s steel overcapacity, plus the proposed infrastructure package to stimulate the domestic steel industry. .
Roy Houseman, the legislative director of the U.S. Steelworkers Federation, represents Biden’s $1.7 billion Infrastructure recommendations It may increase domestic demand for steel and support the industry.
When talking about infrastructure legislation, Hausman said: “It all depends on the scale of the program and how to promote demand.” The current form and scale of infrastructure legislation face strong opposition from Congressional Republicans.
Biden is also working to strengthen the existing “buy American” laws, which force U.S. government agencies to purchase domestically as much as possible, which brings another potential benefit to the U.S. steel industry.
Clete Willems, a former trade official of the Trump administration, said that the Biden administration can cooperate with Europe to strengthen the supervision of transshipment. Chinese steel will reach the United States through Europe and avoid import restrictions.
Williams suggested that in addition to the Section 232 tariffs, the United States could also set quotas on steel imports and threatened to re-impose tariffs if the amount of metal entering the United States surges.
Scott Paul, chairman of the American Manufacturing Federation, supported by the Industry and Steel Workers Union, said that no matter what solution the EU and the United States reach, they need to continue to protect American industry from China’s remaining capacity.
Paul said: “I can’t imagine a situation where the government will pull carpets from the bottom of the US steel industry.”
Sracic of Newstown State University said that calculus relies more on politics than economics, and it seems that neglecting the US steel industry will lose voters. He said: “This is why the government must be cautious even when talking about the removal of tariffs.”
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