What's At Stake
Unfair steel and aluminum imports from nations like Russia and China are putting America’s national security at risk.
Steel and aluminum are vital for America’s national defense and critical infrastructure. But a flood of foreign imports has led to dozens of plant closures and tens of thousands of layoffs — and entire U.S. industries are now in danger of disappearing.
The military needs high quality steel and aluminum to make everything from helmets to tanks to fighter jets to aircraft carriers. We need it here at home, too, in order to build our bridges, rail systems, electrical grid and energy infrastructure.
President Trump pledged to safeguard American-made steel and aluminum from unfairly traded imports from countries like Russia and China.
Now the Commerce Department is readying to issue the findings of its national security investigation into these imports. The Trump administration should use all available tools to secure America’s vital steel and aluminum industry.
Only One Left
There’s no doubt how important steel and aluminum are to our national security and critical infrastructure.
Steel Is Our Strength
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Abrams tanks require 22 tons of steel plate reach — meaning the Pentagon needs 187,000 tons of steel for its 8,500 tanks. A Nimitz-class aircraft carrier needs 50,000 tons of steel plate that is built to withstand the impact of an F-18 Hornet aircraft landing on its deck at 150 miles per hour.
At the height of the wars in Iraq and Afghanistan, the military needed armor plate to protect troops against heavy IED attacks. U.S. steelmakers halted their regular protection to produce enough plate to protect 1,300 vehicles per month.
But as dumped foreign imports weakened U.S. steel and aluminum production, both our military and our own infrastructure has been put in danger:
- There is now only one domestic smelter that can make the high-purity aluminum needed for fighter jets like the F-35 and other military aircraft and vehicles.
- In fact, there are only five operational smelters currently operating in the United States. Only two are running at full capacity, the lowest production level since just after World War II.
- There is now only one domestic manufacturer that can produce the high-end, grain-oriented electrical steel needed for transmission and distribution transformers for all types of energy, including solar, nuclear, wind and natural gas.
- During Superstorm Sandy, there were lengthy delays in restoring power to areas in the Northeast United States because the U.S. has already lost domestic production of electrical transformers.
We know how important American-made steel and aluminum are to our defense and infrastructure — and unfortunately, we’ve already seen what happens when our industrial base is weakened.
American steel and aluminum manufacturers continue to be threatened by unfairly dumped imports. Without a strong, lasting response, we could see further factory closures and job losses — and America might find itself relying on potential adversaries like Russia and China for steel and aluminum.
What's Going On?
What is happening in the steel and aluminum sectors is not due to normal market conditions. Rather, it is because countries like China have been producing far more steel and aluminum than the world needs — and traditional trade enforcement tools have been ineffective in stopping it.
Since 2000, China has added nearly a billion tons of steel capacity — a massive 660 percent increase. Since 2007, its added more than 550 million metric tons of capacity, more than six times total U.S. production.
The same thing has happened with aluminum. In 2000, China produced about 11 percent of the world’s aluminum. Today, it makes more than half.
China clearly manufactures far more steel and aluminum than it needs. But it has to do something with all that product, so it dumps it into the U.S. market at a rock-bottom price.
This is unfair to American workers and companies. China subsidizes its steel and aluminum — in fact, the majority of its manufacturers are government-owned — and these manufacturers don’t have to worry about making a profit.
American manufacturers and workers are the most productive in the world. But right now, they’re being forced to compete against a foreign government. The game is rigged.
China knows it has a problem, and repeatedly has promised to cut its steel and aluminum production. But it repeatedly has broken its promises. China actually increased steel production in 2016. From 2012 to 2015, U.S. imports of semi-fabricated aluminum products from China grew by 183 percent.
What's Not Working
China and other nations are playing the long game when it comes to steel and aluminum imports. The goal is to capture enough market share that U.S. manufacturers go out of business.
Unfortunately, the strategy has worked so far. The Obama administration issued anti-dumping and countervailing duties in a number of trade cases to try and level the playing field for American manufacturers. Former President Barack Obama and his team also pressured China to reduce production through diplomatic efforts — Obama urged China to tackle industrial overproduction during his final G-20 summit, for example.
The United Steelworkers union alone has been involved in more than 50 trade cases for specific product lines — along with four dozen reviews on already established tariffs. The Steelworkers won many of these cases, and that has provided a lifeline to workers and companies.
But nothing has stopped China’s massive overproduction. Smaller companies cannot afford a lengthy legal challenge, and many have gone out of business. Even larger companies lose business and layoff workers during the legal fight, and never come back as strong.
Foreign importers, meanwhile, get around the tariffs. China is accused of sending its steel through Vietnam, for example. Others simply don’t pay the fees, counting on lax enforcement.
Given the increasing threat that these imports have on our national security and critical infrastructure, it’s time for America to step up its enforcement game.
jobs created for every one direct job in the U.S. steel industry
jobs lost directly due to imports from China between 1999 and 2011, according to MIT
jobs lost due to trade deficit with China from 2001 to 2015, according to EPI
What To Do Now
The Commerce Department is scheduled to unveil the findings of its national security investigation into steel imports any day now. The findings of the aluminum imports investigation are expected to soon follow.
The Trump administration should use all tools to safeguard American-made steel and aluminum. The Commerce Department should recommended aggressive, meaningful action to President Trump, and he should act appropriately, including by:
- Implementing measures that allow domestic steel and aluminum producers to recapture lost market share, bring plants back online, rehire workers and expand vital supply chains;
- Including a broad range of steel and aluminum products used in traditional defense applications and critical infrastructure;
- Focusing on the entire supply chain, ensuring all stages of steel and aluminum production and the production of key inputs are included in any action.
America’s industrial base is vital to securing our defense and infrastructure. We hope President Trump will keep his promise and take swift and decisive action to safeguard American companies and workers against unfair foreign competition.