Candidate Trump Pledged to Defend American Steelworkers. Will President Trump Follow Through?

One year ago in Monessen, Pennsylvania , a town defined by the ups and downs of the steel industry, Donald Trump made a promise to stand with America’s steelworkers and industry.

Trump quoted George Washington, Alexander Hamilton, and Abraham Lincoln in laying out his trade policy vision. Then he laid out seven very specific actions he would take as president to “bring back our jobs.”

First was to withdraw the United States from the Trans-Pacific Partnership, which he did the first week of his presidency.

Second was to appoint the “toughest and smartest trade negotiators,” which one could safely argue he has done with Robert Lighthizer as the U.S. Trade Representative, as well as Commerce Secretary Wilbur Ross.

Third was to identify violations of trade agreements, a process that kicked off with an executive order but hasn’t yet reached a conclusion.

Fourth was to renegotiate NAFTA, a process now in the public comment phase that should soon be shifting to talks with Canada and Mexico by the end of the summer.

Fifth was to label China a currency manipulator. That’s a promise he broke in April. (For those who will argue that China’s yuan isn’t technically devalued, I’ll say that the currency manipulation designation has never been about the metrics, as Obama and Bush ably demonstrated by never naming China a manipulator while it most assuredly was.)

Sixth was to bring trade cases against China at the World Trade Organization (WTO) and through our own laws. The Trump administration has yet to do that, and opted to begin with a 100-day action plan seeking market access commitments from China.

Finally, Trump said he’d use his own trade powers to remedy trade disputes and apply tariffs, including something known as Section 232 of the Trade Expansion Act of 1962.

That brings us back to today. In April, Trump announced Section 232 investigations into steel and aluminum imports, which could soon culminate in some stringent trade enforcement actions by his administration. The administration’s self-imposed deadline for a recommendation on steel imports is June 30.

If President Trump is a man of his word, those 232 actions will be robust.

Most of us don’t spend much time in the weeds of U.S. trade policy, so here’s the gist of a Section 232 investigation: Under this 1962 trade law, the president can order an inquiry into whether specific imports are negatively impacting U.S. economic and national security. If they’re determined to be damaging, the president can order significant safeguarding measures.

This is what President Trump asked for when he ordered the Commerce Department to look at imports of steel and aluminum, suspecting that the deluge of questionably traded imports of those commodities from countries like China was intentionally running American factories out of business — and consequentially weakening our defense industrial base.

The critics are out in full force against a 232 action. The editorial board at the Wall Street Journal has labeled it “government favoritism.”

“Idiotic,” declared an in-house Washington Post critic.

But few if any have worked in a steel mill or an aluminum smelter, and they certainly don’t appreciate the roles these industries play in our national security.

Now let’s focus on steel.

Here’s the truth of it: The steel sector is vital to America’s defense and its infrastructure. The end use of these products lead to our tanks, ships, jets, and armaments, as well as bridges, rail systems, and our energy grid. The health of this industry is intertwined with our country’s self-sufficiency, even in an age also defined by the digital economy.

China may not yet be an adversary, but it’s certainly an economic and strategic competitor. And its government has done almost everything possible to bolster its own steel industry at the expense of our own.

Since 2001, when China entered the WTO with the help of the U.S. government, we have seen a steady erosion of domestic steelmaking capacity. In 2000, the American steel industry produced 112.2 million metric tons (mmt) of raw steel. By 2016, output was down to 87.9 mmt.

In that same time, meanwhile, China has added 990 mmt of steelmaking capacity — a 660 percent increase. It now produces roughly half of the world’s steel supply, most it from state-owned mills. And despite its promises to take its foot off the gas, its production continues to ramp up in the face of international criticism.

Global markets have skewed as China has altered trade flows, and overcapacity is among the root causes for the approximate 15,000 U.S. steelworkers laid off in the last 18 months.

Critics are quick to note most steelmaking in America ends in private-sector use, and doesn’t feed into our defense budgets. How, therefore, could larger import shares possibly hurt our defensive readiness?

The answer is this: Without being commercially viable, the steel industry can’t continue to make the costly investments necessary to develop materials that can withstand the rigors of use in a military platform.

Those investments in our industrial base should be made here, not overseas.

That viability has been at risk. Steelmaking jobs everywhere are at risk.

Leave your free trade dogma at the door. A return to a healthy production capacity for these materials is what we’re talking about when we discuss the health of the industry — and every time a mill is idled or a smelter is shut down, that health takes a hit. Also damaged is the capability of our defense industrial base. Conversely, new tariffs or quotas on imported steel won’t even put a noticeable dent in the consumer price index.

Whatever you may think of Donald Trump’s promises, the steel industry deserves our support. And President Trump should make good use of these Section 232 investigations.


Reposted from Medium