As has been covered in the news over the past year, the current administration plans to alter its policies to be more protective of certain domestic manufacturing industries judged as disadvantaged by foreign imports. One of those industries targeted for review is the steel and metal products industry. By April of 2018 or earlier, we may see a drastic shift in policy towards reducing imports, which will dramatically increase the price of metal products in the marketplace.
Why Is The Policy Changing?
A recent report by the US Commerce Department determined “excessive steel imports have adversely impacted the economic welfare of the U.S.,” citing concerns over “numerous U.S. steel mill closures, a substantial decline in employment, lost domestic sales and market share, and marginal annual net income for U.S.-based steel companies.”
The report follows up on a similar report in 2001, which investigated the same question of whether steel imports had an effect on national security. In 2001, no changes were recommended to the existing import policy.
What are the Recommendations?
Citing the level of “import penetration” and the “reduction in basic oxygen furnace facilities since 2001,” the US Commerce Department has issued a recommendation to reduce imports “through quotas or tariffs” to a level that will “enable U.S. steel mills to operate at 80 percent or more of their capacity.”