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Trump cites need for domestic steel to be used in national defense

In this April 7, 2017, photo, President Donald Trump, joined by Secretary of State Rex Tillerson, left, speaks during a bilateral meeting with Chinese President Xi Jinping at Mar-a-Lago in Palm Beach, Fla.

ALEX BRANDON/ASSOCIATED PRESS

By STEPHEN KOFF | Advance Ohio Media (Tribune News Service) | Published: April 21, 2017

WASHINGTON, D.C. — President Donald Trump today ordered the Commerce Department to investigate whether steel imports harm the defense of the United States, moving the ongoing complaints from the steel industry to a new plane — one that could lead to new sanctions and trade actions between this country and its steelmaking competitors.

"Steel is critical to both our economy and our military," the president said. "This is not an area where we can afford to become dependent on foreign countries."

Much of the criticism of steel dumping has involved Asian countries, including Korea and China. Commerce Secretary Wilbur Ross cited China's huge steel-making capacity and its exports when discussing the investigation.

But Trump maintained separately this is not about China.

"This has nothing to do with China," the president said shortly after noon, in answer to a reporter's question when signing the executive memorandum for the steel inquiry. "This has to do with worldwide, what's happening. The dumping problem is a worldwide problem."

Standing by the president in the Oval Office were representatives of the steel industry and United Steelworkers union, including top executives from Timken Steel, based in Canton; West Chester-based AK Steel, and ArcelorMittal, a global steelmaker with a large Cleveland operation.

"This executive order will give us the tools we need to lure our companies back and our people back to work," said Leo Gerard, president the Steelworkers union.

John Brett, president and CEO of ArcelorMittal USA, who was with Trump at the signing, noted in a statement that his company "is a proud supplier of American-made steel for defense applications, from nuclear submarines and aircraft carriers to missiles and tanks." He, too, ascribed the steel market "crisis" to China's excess capacity, and said "we welcome the administration's efforts to aggressively address this problem."

The question, Ross said in a briefing about an hour before Trump signed the memorandum for the investigation, concerns not only the effect of foreign steel coming into this country in high volumes for all manner of manufacturing, from appliance-making to energy industry components, during peacetime. That has been a routine subject of complaint from domestic steelmakers, who win some cases in trade court and lose others.

Rather, Ross said, the administration wants to know how this could affect makers of weapons and military vehicles that need to ramp up in wartime -- and whether the domestic steel-making workforce and its skills would be ready.

If not, the White House said, the Trade Expansion Act of 1962 would give the country authority to impose tariffs or take other steps to halt or slow imports.

Trump, signing the memorandum, called this "historic day for American steel."

The president said his administration would "fight for American workers and American-made steel, and that's beginning immediately."

Congress members from Ohio applauded Trump's willingness to investigate the issue. But some said they are not yet convinced he will follow up as they say is needed. The last time such an inquiry was launched, when George W. Bush was president, the Commerce Department ended it with no action recommended.

"I'm pleased the administration is willing to consider trade enforcement tools that haven't been used in more than 15 years," Sen Sherrod Brown, an Ohio Democrat, said in a statement. "But this investigation won't mean much to Ohio steel companies and steelworkers unless it is followed by tough action that addresses China's overcapacity and stops the flood of unfairly traded steel imports from coming into our market."

Rep. Marcy Kaptur, a Toledo Democrat, said studies are nice but action is better.

The United States steel industry, labor unions and steel-state lawmakers frequently say the domestic workforce has been decimated because of what they label unfair foreign competition. They say that foreign steelmakers, with direct or indirect financial help from their governments, undercut the domestic industry by charging prices that cannot be met by the domestic industry.

While manufacturers appreciate the cheaper steel, it results in domestic steelmakers cutting jobs and closing mills amid a flood of cheaper imports. In trade terms, this is called dumping by the foreign suppliers.

Nothing is new about that complaint nor a related one: When told to stop, the foreign suppliers simply start exporting from a different country. But Trump, who ran for president on a promise to restore jobs in these kinds of hard-hit industries, has vowed to require that when major new energy and infrastructure projects launch in the United States, they will be made with American steel. Keeping that promise may be difficult for a variety of reasons, from the global nature of some steelmaking processes and operations to possible trade challenges from foreign countries.

Now Ross, who as an investor played a role in Cleveland steelmaking when he restructured LTV Steel and later sold its assets to ArcelorMittal, said he will determine whether there is a defense case to be made.

If the answer is yes -- that this country's defense could be jeopardized by deficiencies in its steelmaking capacity or skills -- the United States could try to impose tariffs on imports. That would force up their prices and make domestic steel prices competitive, enabling closed mills to reopen and rehire.

Asked about trade court challenges from China if the United States were to use national defense as a reason to impose tariffs, Ross said it is premature to speculate on the outcome because the inquiry is just starting.

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©2017 Advance Ohio Media, Cleveland
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