Manufacture This

The blog of the Alliance for American Manufacturing

The industry continues to struggle due to the unprecedented surge in dumped products.

White House Chief of Staff Denis McDonough visited the Iron Range in Minnesota on Tuesday, hearing stories from laid-off workers, local officials and others about the devastating impact dumped steel from countries like China has had on the local community.

McDonough’s on-the-ground visit came at a crucial time for the American steel industry.

It has been a difficult year for steelworkers at the Iron Range and across the country, as U.S. steelmakers have faced an onslaught of subsidized foreign steel that has been dumped into the U.S. market. American steelmakers and their workers can compete against anyone in the world — but right now, the competition isn’t playing fair.

But there are signs of hope heading into 2016.

On the same day that McDonough met with workers in Minnesota, the Commerce Department announced in a preliminary finding that corrosion-resistant steel imports from China were sold at unfairly low prices and will be taxed at 256 percent. Imports from India, South Korea and Italy also will be taxed at lower rates.

It is a small but important step in the effort to level the playing field for U.S. steelworkers and companies. These steel imports are heavily subsidized by their governments, and then sent to the United States, where they are sold at unfairly low prices.

Take China, the most egregious of the offenders. The Chinese government subsidizes its massive steel industry. As a result, China creates far more steel than it can ever use at home — approximately 425 million metric tons overcapacity in China alone. On the world stage, China produces 700 million metric tons of excess steel.

But rather than cut back on production — which would mean cutting jobs and risking a backlash from its own workers — China’s government continues to heavily subsidize its steelmakers and continues to overproduce.

In fact, China is producing more steel than ever before. Production is up a whopping 540 percent since 2000.  To get rid of all that steel, China is flooding the U.S. market at rock bottom prices. MarketWatch wrote in October that China steel is “now as cheap as cabbage.”

That’s why U.S. steelmakers banded together in June to file several trade cases alleging that products from China and other nations were being dumped. Tuesday’s Commerce Department announcement, which focuses on corrosion-resistant steel imports, is one positive step forward in the effort to level the playing field, and hopefully similar outcomes will follow.

In addition, the House recently passed key legislation known as the Customs and Enforcement bill that provides a package of reforms to the way goods are treated and tracked as they enter our market.

While the bill didn’t go as far as we would like, it does include overdue reforms to the processes of handling allegations of evasion of our trade laws. The Senate is expected to take up the measure in 2016.

As it stands now, things remain difficult for American steel companies and workers. However, decisions like the one by the Commerce Department on Tuesday provide hope that the situation will improve next year. 

And hopefully McDonough will take what he learned in Minnesota back to President Obama. The administration must get tough on trade cheats and stand up for American workers and companies.