Washington is certainly a contentious place these days. And President Trump has undoubtedly been a lighting rod for partisan squabbling. But despite the rough ride in the nation’s capital, the American people may find reasons to agree with at least one effort undertaken by the Trump Administration — since it could help to grow good jobs and boost the overall economy. And that’s in the president’s decision to impose safeguard tariffs on a flood of foreign steel currently being “dumped” into the US market.
Steel is uniquely important in successful economies since it’s critical for everything from the solid metal used in cars and buildings to the extremely high-tech, lightweight frames used in military aircraft. While the United States once pioneered the world’s steel industry, it is now the largest importer of steel — importing nearly four times as much as its exports.
In sharp contrast, China is by far the world’s largest exporter of steel. In an average month, China’s government-owned companies produce nearly as much steel as the US does in one year. Following the directives of the Communist Party of China, these companies have increased steel production by 65 percent — and now account for 50 percent of world production.
Despite global calls for China to reduce steel supply, production has continued to rise. Today, China produces more steel than the next nine steel-producing nations combined. It’s not that China needs all this steel, however. The government-mandated growth of recent years occurred after China had already produced too much steel for its own consumption. And so, a reckless combination of state ownership and massive government funding has led to a glut of steel being continually shipped to the U.S. — and often at below the cost of production.
Both the government funding for this steel, and the selling of it at below cost value, are considered violations of world trade law. But Beijing has shown complete indifference to such rules, especially since their massive exports have led to an ongoing decline in America’s steel industry. US steel production has fallen by 20 percent over the past decade, with employment declining by roughly 50,000 jobs since 2000. Key steelmaking plants have closed, and for certain types of steel (such as those used in electrical transformers), only one US producer remains.
The Commerce Department recently investigated the impact of all this dumped steel. Its findings were disturbing, with Commerce Secretary Wilbur Ross reporting that the quantities and circumstances of steel imports “threaten to impair the national security.”
Thankfully, President Trump has announced emergency tariffs on steel imports to help ensure the long-term viability of the industry. There will be consequences, though, and US companies that buy steel to make lawn mowers, hand tools, and other products will feel the impact. Their overseas competitors will continue buying artificially cheap foreign steel, and will export products that undercut the pricing of American-made products. President Trump should now focus on protecting the entire manufacturing supply chain through broader trade remedies, including efforts to address currency exchange issues.
President Trump is correct to impose steel tariffs to help the U.S. maintain its long-standing position as an industrial leader. The alternative — losing our steel industry altogether — would leave the U.S. more vulnerable to the whims of other countries, including strategic rivals.