American manufacturing group seeks end to Section 232 tariffs
The Coalition of American Metal Manufacturers and Users (CAMMU) is calling on United States President Joe Biden to end the Section 232 steel and aluminium tariffs, a position that puts it at odds with groups representing domestic steel producers.
The group, which represents more than 30,000 manufacturers, argues that the tariffs have not been successful in expanding US steel capacity and instead have raised prices for domestic manufacturers, making their products less competitive and thereby endangering their survival.
“The raw materials that make up our members’ most critical input are priced at levels that are inflated over that of the global marketplace, and many products - particularly specialized types of steel and aluminium - are in short supply and subject to severe delivery delays, or simply [are] not available at all,” CAMMU said.
“By jeopardizing the ability of businesses to access the steel and aluminium they need, the... tariffs [imposed by former President Donald Trump] have made it more difficult for American manufacturers to compete with finished product imported from overseas.”
CAMMU claims that the tariffs have caused delivery times to be delayed to up to 16 weeks and prices to soar to record highs.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $58.96 per hundredweight ($1,179.20 per short ton) on Tuesday February 9, down by 0.47% from the record $59.24 per cwt on Monday.
And the exclusion process offered by the US Commerce Department is unable to resolve issues caused by the tariffs, with that system facing significant delays, according to CAMMU.
Groups representing the domestic steel industry - the American Iron and Steel Institute (AISI) and the Steel Manufacturers Association (SMA) - disagree, pointing to the success of the steel tariffs.
“The steel tariffs are very much still needed and necessary because there is a massive global overcapacity estimated at 700 million tonnes,” AISI chief executive officer Kevin Dempsey said, referencing a figure from the Organization for Economic Co-operation and Development.
The recent spike in prices is a result of the Covid-19 pandemic, not the tariffs, he added.
Steel demand recovered sharply following the automotive supply chain disruptions in spring 2020, with capacity utilization from mid-March to the beginning of May last year shrinking to 51% from 81%, Dempsey noted.
Additionally, plenty of steel still enters the market duty free, he said.
On top of the product exclusions through the Commerce Department, Dempsey noted that the main sources of imports enter tariff free - pointing to Mexico and Canada - or under a quota system in the case of Brazil and South Korea.
Moreover, he noted that the steel tariffs have accomplished their purpose of supporting steel investments and expanding capacity, a point the SMA also made.
“The [Section] 232 tariffs have resulted in increased capacity utilization and investment. Over $13 billion in investment is planned between now and 2023. This will result in a sustainable, modern American steel industry. To abruptly eliminate the tariffs could result in market distortions and a surge of unfairly traded imports. Also, eliminating Section 232 measures will tip the scales towards high-carbon-polluting producers from overseas shipping their products to our shores,” SMA president Philip Bell said.
“The SMA believes that the [Section] 232 measures should be continued until a comprehensive solution to the problem of global excess steel capacity can be reached. American steelmakers are still recovering from the pandemic, and while steel production decreased globally it increased by over 18% in China last year,” he added.
Similarly to steel, aluminium producers and consumers are equally divided on the issue of the tariffs.