The United States steel industry has long received government protection from import competition, today in the form of hundreds of “trade remedy” (antidumping and countervailing duty) measures on specific iron and steel products and “national security” tariffs on almost all forms of finished and semi‐finished steel products. Numerous economic analyses have shown that these measures raise domestic steel prices and harm steel‐consuming U.S. manufacturers, including by disadvantaging them against foreign competitors with access to lower‐cost (less‐tariffed) steel inputs. Indeed, the Trump administration itself acknowledged this problem when it sought to extend the “national security” tariffs to imports of downstream “derivative” steel products like nails, which increased significantly after the tariffs were imposed.
This disadvantage continues today, as shown in new price data from steelbenchmarker — a private, global survey of almost 1000 steel buyers, sellers, and users.
Even leaving China aside, these data show that the United States continues to be an Island of High‐Priced Steel, in which trapped U.S. steel consumers — whose workers, output, and investment dwarf those of the steel industry — face a major cost disadvantage versus their competition in Europe and elsewhere. Where steel is a large part of these companies’ total input costs, this situation makes them utterly uncompetitive at home (versus imports) and abroad (versus local companies there and other exporters). This disadvantage is something numerous U.S. manufacturers have repeatedly told the public and the government, to no avail.
President Trump’s “solution” to the problem was to expand the “national security” tariffs, thus passing on artificially higher steel costs to other U.S. companies and consumers (and thus making them less competitive). Fortunately, the courts recently ruled that approach to be unlawful, but all of the other U.S. steel protectionism remains in place. President Biden could fix some of that (the “national security” tariffs) with the stroke of a pen, but the rest requires systemic reform via Congress.
Unfortunately, neither of them appear eager to help.
Commentary by Scott Lincicome. Originally published at Cato At Liberty. https://www.cato.org/blog/how-american-steel-protectionism-harms-american-manufacturers-one-simple-chart