US Metal Users Coalition Seeks Termination of Section 232 Tariffs
The Coalition of American Metal Manufacturers and Users Executive Director Mr Paul Nathanson in a 15 March letter to newly appointed US’s Commerce Secretary Ms Gina Raimondo of Department of Commerce wrote “The Section 232 tariffs on steel and aluminum have damaged CAMMU members and other US steel and aluminum using manufacturers, placing them at a disadvantage when competing with global competitors. We were therefore surprised by your March 4 comment on MSNBC that the data show that those tariffs have been effective. As we wrote to President Biden on 10 February 2021 there is scant evidence that the Trump steel and aluminum tariffs have helped the domestic steel industry, as the sector continues to close plants and shed jobs, but numerous published studies provide evidence of the damage caused by these tariffs to our nation's economy, its small manufacturing businesses, employment in the manufacturing sector, and to carefully constructed supply chains. The Trump tariffs have increased the costs of goods manufactured in America when compared to overseas competitors whose governments do not impose an artificial tax on their inputs. If these tariffs are not terminated, the result will be lost business for US manufacturers and lost US jobs.”
The following provides an overview of the data that CAMMU has compiled regarding the negative consequences of the Section 232 steel and aluminum tariffs
Broad cost, narrow benefit: The Trump steel and aluminum tariffs sought to protect a small subsection of those domestic industries at the expense of the nation's economy as a whole. Over 6.2 million Americans work in industries that use steel, while the steel industry itself directly employs only 141,700 workers. The tariffs have shifted injury from one industry to a much broader segment of the economy. The data on employment in steel and aluminum production shows a muted benefit of approximately 1,000 more jobs in November 2019 than in March 2018 in the protected industries. A study by the Federal Reserve Board of Governors indicates that increased input costs due to the tariffs are associated with 75,000 fewer jobs in the U.S. manufacturing sector. U.S. manufacturers would have been far better off with measured and targeted enforcement strategies that do not hurt the vast majority of the sector and its employees.
Many steel products are no longer readily available: Companies cannot manufacture products out of raw materials that they cannot procure. U.S. manufacturers increasingly report that the quality of the steel and the availability of specialty materials is a significant concern. As we informed President Biden in our February 10 letter, our member companies report not only record steel prices, but also delivery times stretching 12-16 weeks, causing significant disruptions. Thousands of manufacturers cannot procure the necessary raw materials in the United States in sufficient and reasonably available commercial quantities, and of a satisfactory quality, leading American companies to rely on imports of steel and aluminum from many of our overseas allies.
Cost of tariffs paid by US manufacturers and US consumers: Researchers from Columbia University, the Federal Reserve Bank of New York and Princeton University found that the cost burden of these tariffs is borne by US manufacturers and consumers. The American Action Forum published a study that found that, based on 2019 import levels, US and retaliatory tariffs currently impact over USD 460 billion of imports and exports, and tariffs are increasing annual consumer costs by roughly USD 57 billion annually.
Domestic steel industry is not making needed investments or restructuring: Former President Trump's protection of the domestic steel industry did not require the industry to make investments to modernize its facilities, restructure or hire more workers. Evidence suggests that the increased revenue and profits enjoyed by the steel industry simply went into the pockets of company executives and shareholders. The initial minimal benefits for steel producers gained from the tariffs quickly subsided because the protection did not result in the needed restructuring and investments in the US that have plagued the industry for years. Some domestic steel producers did announce significant investments in Mexico, while in the US, since the tariffs were implemented, the steel industry has announced closures of mills across the U.S., idling of smelters and reduced work hours at plants in Louisiana, Kentucky, West Virginia and Pennsylvania. Meanwhile, downstream users of steel and aluminum have watched the decrease of imported steel and aluminum and the increasing importation of downstream products containing the metals, such as their overseas competitors' products, entering the US tariff-free.
Cost of retaliation by US trade partners: The Trump administration's broad, pretextual use of Section 232 tariffs to assist aluminum and steel producers also imposes costs beyond the manufacturing industries, as many U.S. trade partners imposed retaliatory tariffs of their own. Specifically, tariffs imposed by the EU, China, Turkey, India and Russia in response to US steel and aluminum tariffs targeted over USD 9 billion worth of American products, for an estimated total tax of USD 2.11 billion. These costs are directly passed on to American producers and consumers.
CAMMU is a broad organization of US businesses and trade associations representing more than 30,000 US companies and more than one million American workers in the manufacturing sector and the downstream supply chains of a wide variety of industries. 1CAMMU members include Associated Builders and Contractors, Hands-On Science Partnership, Industrial Fasteners Institute, National Tooling & Machining Association, North American Association of Food Equipment Manufacturers, Precision Machined Products Association and Precision Metalforming Association