The Office of the United States Trade Representative (USTR) and the U.S. Department of Commerce will hold a public hearing “on the global steel industry situation and its impact on the U.S. steel industry and market.” The hearing provides an opportunity for the public to comment on government policies that attempt to “protect” U.S. steel producers from competition.
The U.S. government justifies special tariffs, such as anti-dumping duties, by alleging that foreign nations set unfair rates below domestic market prices. Currently, the U.S. has 75 anti-dumping and countervailing duty orders in place for iron and steel mill imports.
Stakeholders in the steel industry, such as Manufacture Alabama President George Clark, claim in submitted testimony that “foreign steel producers—most notably state-owned and state-supported Chinese companies—are largely to blame as they routinely overproduce copious amounts of raw steel and finished steel products, dumping these products into a market void of need.” Many groups insist that U.S. special steel tariffs are necessary to create a “level playing field.”
Contrary to this claim, Alden Abbott, senior legal fellow at The Heritage Foundation, states that “anti-dumping is in fact a form of special-interest cronyism that imposes high costs on Americans and thwarts beneficial competition.” Anti-dumping duties and other special tariffs for the steel industry are a prime example how the government picks winners and losers.
U.S. fastener manufacturers are one of the losers as a result of this favoritism. According to testimony submitted by Rob Harris of the Industrial Fasteners Institute:
U.S. fastener manufacturers cannot be assured of being able to acquire the steel they need in the quantity, quality or form needed to make their products from just one country. That is because no one country has the capacity to produce all of the particular grades and forms of steel needed to supply U.S. fastener manufacturing capacity … Thus, broad trade remedies and legislative actions that affect all steel of all kinds may produce temporary relief for a small number of producers, but they are blunt instruments that may also have unintended negative consequences on steel consumers.
Steel is a major component in almost every facet of American life, and domestic steel consumers need the variety of steel products provided by free and open trade. Automakers rely on steel as a means of production—not only as a component of cars and trucks, but also as a key part of their machinery. Construction companies rely on steel to build houses and office buildings. More than that, every American family utilizes products made from steel like cars, washing machines, lawn mowers, stoves, and cellular devices.
The cost of government favoritism for steel producers “is borne by the American public overall, which must pay higher prices and choose from a narrowed range of product options,” according to Bryan Riley and Anthony Kim, senior policy analysts at The Heritage Foundation. “Fundamentally, free trade is about rejecting favoritism and expanding economic opportunity for all,” and the U.S. government has the chance to advance these principles in this hearing.
