WASHINGTON (Feb. 16, 2018) – The R Street Institute disagrees strongly with the U.S. Commerce Department’s affirmative finding that current steel imports jeopardize national security and urges President Donald Trump not to implement the department’s recommended 24 percent global tariff to alleviate the supposed problem.

While there is little doubt that steel is necessary for U.S. military superiority, as R Street pointed out in a January policy study by Trade Policy Manager Clark Packard, only 3 percent of steel shipped domestically in 2016 was used for national security or homeland security purposes. Packard also notes that the United States has a large number of nonhostile trading partners from whom to source steel, and none of the five largest foreign suppliers of steel could be considered strategic threats.

In addition to the global tariff, the Commerce Department recommends tariffs of 53 percent and a quota of 63 percent of 2017 levels on steel imported from Brazil, China, Costa Rica, Egypt, India, Malaysia, Korea, Russia, South Africa, Thailand, Turkey and Vietnam. Such restrictions will weaken the economy by raising manufacturers’ costs and invite foreign retaliation from our trading partners, Packard said.

“With more than 150 antidumping and countervailing duties on the books, steel is one of the most heavily protected domestic industries,” Packard said. “Using the national security power provided for by Section 232 of the Trade Expansion Act of 1962 to justify steel protectionism sets a dangerous precedent – one that could unwind the post-World War II rules-based global trading system that been an enormous benefit to the United States.”

In 2002, President George W. Bush imposed tariffs on imported steel pursuant to Section 201 of the Trade Act of 1974. After the United States lost a challenge at the World Trade Organization, the tariffs were withdrawn, but not before an estimated 200,000 jobs and nearly $4 billion in wages were lost in just 18 months, primarily in steel-consuming industries.

Packard urged the Trump administration to tread carefully in how it responds to the department’s report.

“Heavy steel tariffs will weaken the United States both economically and strategically,” he said.

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