Steel protectionism is a slippery slide

WASHINGTON (January 10, 2018) – Restricting steel imports, including those from China, would prove both an economic and strategic mistake, argues R Street Trade Policy Counsel Clark Packard in a new study. The U.S. Commerce Department should take such facts into consideration as it prepares to announce the results of its investigation of whether steel imports pose a national security risk, a decision that must be handed down by Jan. 15.

Restrictions on imported steel would hurt downstream domestic manufacturers, Packard argues. He points to 2015 census data showing that, while steel mills employ 140,000 Americans and add about $36 billion to the economy, steel-consuming industries like manufacturing, which rely on imports, employ 6.5 million workers and add about $1 trillion of gross domestic product.

“Steel protectionism would harm the domestic economy, jeopardize the rules-based trading system and needlessly provoke allies,” Packard writes. “While the administration may be able to bolster a small slice of the domestic steel industry by imposing such restrictions, any benefits would be greatly outweighed by the damage done. In light of this, the Trump administration should reject the imposition of import restrictions on steel.”

While the investigation is expected to focus largely on Chinese steel, Packard notes that Chinese steel exports to the United States have declined more than 80 percent over the past decade. The 950,000 tons imported from China in 2016 represented just slightly more than 3 percent of all steel imported to the country, and less than 1 percent of all of China’s steel exports that year. The rest of the top ten exporters to the United States either are not classified as threats or are actually allies, he notes.

“Accordingly, a haphazard decision by the Trump administration would almost certainly alienate important strategic allies, as well as some of the president’s most trusted advisors,” Packard writes.

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