WASHINGTON — The Trump administration has launched a wide-ranging investigation into whether steel imports threaten national security, a move aimed at China's growing dominance in steel production.
Secretary of Commerce Wilbur Ross launched the investigation Wednesday, saying a 19.6% increase in steel imports in the first quarter has had "a very serious impact on the domestic industry."
President Trump put his stamp on the effort Thursday, signing a presidential memorandum asking Ross to make the investigation a priority. Calling it a “historic day for American steel,” Trump said his administration would “fight for American workers and American-made steel, and that’s beginning immediately.”
By making steel imports a national security issue, the investigation could give the president the legal authority to place broad restrictions on steel imports into the United States — a move that could potentially have even bigger consequences than the administration's investigation into unfair trade practices.
“Maintaining the production of American steel is extremely important to our national security and our defense industrial base," Trump told reporters in an Oval Office signing ceremony packed with a dozen steel industry executives and the president of the United Steelworkers. "Steel is critical to both our economy and our military. This is not an area where we can afford to become dependent on foreign countries.”
To launch the investigation, the administration has invoked a rarely used legal tool known as a Section 232 investigation. Since it was authorized as part of the Trade Expansion Act of 1962, it has only been used 14 times – most recently in 2001, when the George W. Bush administration conducted a year-long investigation into the imports of iron ore and semi-finished steel, but took no action.
Though the law gives the Secretary of Commerce 270 days to complete the investigation, Trump said he expects it done in 50 days.
The Trade Expansion Act is aimed at protecting industries vital to national security. But Trump's memorandum emphasized the role of economics on national security, asking for the investigation to focus on the impact on American workers and federal tax revenues.
Ross said the two issues are intertwined: If the United States needed a quick buildup in production capacity to support a war effort, highly trained American workers will be needed to produce the highly complex alloys used in armor-plated steel.
Trump has already signed a number of executive orders targeting unfair trade practices, like the dumping of foreign products at below production costs in order to drive out domestic competition. The Commerce Department has imposed penalties for steel dumping in 152 cases, with 25 more cases pending, but Ross said those remedies are often unsatisfactory.
"The problem with those countervailing duty and anti-dumping cases is that they’re very limited in nature, to a very, very specific product form one specific country," Ross said. And even if the U.S. takes action, importers can evade the penalties by shifting to another product, or shipping it through a third country, he said.
"It doesn’t solve the whole problem," Ross said. "So we’re groping here to see whether the facts warrant a more comprehensive solution to deal with a wide range of steel products from a wide range of countries."
While the investigation will be global, the Trump administration has made it clear China is the target. China's excess capacity alone is enough to swamp the U.S. domestic demand.