On February 16, the U.S. Department of Commerce (Commerce) released its reports and recommendations to President Trump regarding its investigations on the impact of steel and aluminum imports on U.S. national security. As previously reported, Commerce initiated these investigations in April 2017 pursuant to section 232(b)(1)(A) of the Trade Expansion Act of 1962. In its reports, Commerce “found that the quantities and circumstances of steel and aluminum imports ‘threaten to impair the national security,’ as defined by Section 232.” The reports recommend a variety of actions that President Trump may take in response to the findings, and President Trump is currently reviewing these recommendations.

Imports of Steel

In its report on the impact of steel imports on U.S. national security, Commerce found, among other key findings, that “six basic oxygen furnaces and four electric furnaces have closed [in the United States] since 2000 and employment has dropped by 35% since 1998,” and that global excess steel capacity is nearly seven times the total annual amount of U.S. steel consumption. Commerce also found that the excess steel capacity of China—far and away the world’s largest producer and exporter of steel—is more than the total steel capacity in the United States, and China produces almost as much steel in an average month as the United States produces in an entire year.

To “address the problem of steel imports,” Commerce recommended that President Trump impose a global tariff of at least 24 percent on all imports of steel products from all countries; a “tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States;” or a “quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.” Commerce explained that its proposed remedies are “intended to increase domestic steel production from its present 73% of capacity to approximately an 80% operating rate, the minimum rate needed for the long-term viability of the industry.”

Imports of Aluminum

In its report on the impact of aluminum imports on U.S. national security, Commerce found that imports of aluminum “have risen to 90% of total demand for primary aluminum, up from 66% in 2012.” Commerce also found that, from 2013 to 2016, U.S. employment in the aluminum industry decreased by 58 percent, “6 smelters shut down, and only two of the remaining 5 smelters are operating at capacity, even though demand has grown considerably.” Commerce also concluded that “there is only one remaining U.S. producer of the high-quality aluminum alloy needed for military aerospace. Infrastructure, which is necessary for our economic security, is a major use of aluminum.”

To address “the excessive imports of aluminum,” Commerce recommended that President Trump impose a “tariff of at least 7.7% on all aluminum exports from all countries;” a “tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam. All the other countries would be subject to quotas equal to 100% of their 2017 exports to the United States;” or a “quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.” Commerce explained that these measures would cover “aluminum ingots and a wide variety of aluminum products” and that “[e]ach of the three proposals is intended to raise production of aluminum from the present 48% average capacity to 80%, a level that would provide the industry with long-term viability.”

Next Steps

The law requires President Trump to make decisions on Commerce’s steel recommendations by April 11, 2018, and on Commerce’s aluminum recommendations by April 19, 2018. Members of Congress have met with President Trump to advocate both for and against the imposition of possible remedial measures. According to Bloomberg, President Trump wants to impose a 24 percent tariff on all steel imports, and he is considering a 10 percent tariff on all aluminum imports. As Commerce explained, President Trump “may take a range of actions, or no action, based on the analysis and recommendations provided in the reports. Action could include making modifications to the courses of action proposed, such as adjusting percentages.”

Commerce also explained that any tariffs or quotas that President Trump decides to impose will be in addition to any duties already in place on steel or aluminum imports in the United States. Furthermore, the reports recommend “that a process be put in place to allow” the Commerce Department “to grant requests from U.S. companies to exclude specific products if the U.S. lacks sufficient domestic capacity or for national security considerations. Any exclusions granted could result in changed tariffs or quotas for the remaining products to maintain the overall effect.”