Speculators, not Section 232 actions, are elevating US steel prices, Commerce Secretary says

US Commerce Secretary Wilbur Ross has accused unnamed industry participants of wrongly “profiteering” from Section 232 tariffs on imported steel.

Ross also suggested that the Trump administration would investigate alleged stockpiling that he said has driven steel prices higher than merited by the tariffs – 25% in the case of foreign steel.

“There are people who illegitimately are profiteering out of the tariffs,” Ross said on Wednesday June 20 during testimony before the Senate Finance Committee about trade and tariff policy. “There is no reason for tariffs to increase the price of steel by far more than the percentage of the tariff – and yet that’s what has been happening.”

Ross accused “various intermediary parties” of placing material in inventory and withholding it from the market. “We are starting an investigation into that,” he said.

American Metal Market’s hot-rolled coil index stands at $45.52 per hundredweight ($910.40 per ton), up 1.5% from $44.85 per cwt a week ago and up 54.3% from $29.50 per cwt a year ago – before Section 232 tariffs were put in place. 

“That [higher steel price] clearly is not a result of the tariff. That’s clearly a result of anti-social behavior by participants in the industry,” Ross said. 

The secretary’s comments could dampen steel prices, market participants said. “This will stop the price increases for sure,” one West Coast distributor said.

Ross also said during the hearing that product exclusion requests from the tariffs stand at more than 20,000. Decisions on 98 requests were to be announced Wednesday, he added, with 42 granted and 56 denied.

The department has also received more than 2,300 objections to exclusion requests, he noted. “We’ll be accelerating the process of exclusions requests,” Ross pledged. The department will do that by granting those that are correctly submitted and to which no objections have been received, he said.

Commerce has faced criticism for being slow to respond to Section 232 exclusion requests.

Ross’ remarks came after Sen. Orrin Hatch (R-Utah), who chairs the Senate Finance Committee, said the tariffs are hurting US manufacturers and delaying construction projects. That “was not the intent of the actions on steel, but it is the inevitable result,” Hatch said in prepared remarks ahead of the secretary’s comments.

Hatch also excoriated Ross for hammering Mexico – the largest export market for American pork – Canada and the European Union instead of China.
Mexico plans to retaliate against the Section 232 action with tariffs of 20% on US pork exports.

“American farmers… are bearing the brunt of the retaliation for these actions,” Hatch said.

And Section 232 has failed to address its alleged target – Chinese overproduction – he said. “In reality, these actions target our allies, particularly Canada and the European Union.”

The senator likewise blasted the Trump administration’s Section 232 investigation into imports of automobiles and automobile parts. The average imported car casts $23,200, and a 25% tariff would drive that figure up by $5,800, Hatch said. “A car isn’t a can of soup, Mr. Secretary.”

Ross has said that Section 232 tariffs would increase the cost of a can of soup by only a fraction of a cent.

“Once again, though supposedly pursued for national security reasons, tariffs on cars and trucks target our closest allies – namely, Europe, Canada, Mexico, Japan and South Korea – while allowing China to continue its predatory trade policies undeterred,” Hatch said.

Steel prices rose after President Donald Trump announced plans to impose 25% tariffs on imported steel on March 1 and shot further upward when his administration surprised the market by imposing the duties on Canada, Mexico and the European Union – the United States’ traditional allies and trading partners.