The U.S. steel industry is facing its worst import crisis in more than a decade. In the aftermath of the Great Recession, steelmakers in other countries, backed by aggressive government support, continued to add production capacity as demand stagnated.
The Takeaways
The excess capacity plaguing the industry stems largely from state support for – and direct government involvement in – the steel industry in other countries. In 2011, half of the world’s 46 top steel companies were state-owned, and they accounted for nearly 40 percent of global production.
U.S. imports of unfairly traded products are increasing as countries such as China and others deceptively sell subsidized basic steel products to companies in third-party countries, who in turn finish these products, like pipes, for sale in the American market.
Aggressive government support, coupled with the steel industry’s capital-intensive nature, leads to the kind of import surges now threatening the American market. Strong trade remedies have been critical to the health of domestic industry during previous periods of trade distortions, and are necessary now if the industry is to avoid long-term damage.