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In Response: Actually, the steel tariffs have worked

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Machinist Bill Pham measures a chunk of steel that will become a gear for a mining conveyor at Gear Works in Seattle on Feb. 9, 2018. The White House has announced a plan for heavy tariffs on imported steel. (Mike Siegel/Seattle Times)
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I am writing to set the record straight on incorrect assertions made in the Nov. 16 commentary in the News Tribune, “ Steel yourself for new steel tariffs – and their harm to industry ,” by Tori Smith of the Heritage Foundation.

The truth is, the steel tariffs have worked.

Foreign steel imports, which took almost 27% of the market in 2017, fell to just 19% in 2019. The share of America’s productive steel capacity in active use (capacity utilization) increased from 74% to almost 80% in those two years. Steel mills that had been idled due to surges in unfairly traded imports were able to restart and rehire laid-off workers. And the industry began investing billions of dollars in new and upgraded plants.

The tariffs helped to stabilize a critical industry injured by repeated surges in subsidized and dumped steel from many countries — and they are needed now more than ever. Previous major global economic downturns, like the Asian financial crisis of the 1990s and the Great Recession of 2008, led to steel import crises in the U.S. as foreign steel industries dumped their excess production in the U.S. market when demand in their own markets dropped. Without the steel tariffs, history likely would repeat itself.

The threat of renewed surges in steel imports in the face of the coronavirus shock makes the national-security justification for the steel tariffs, as stated by the Secretary of Commerce, even more clear. Our nation’s power grid is critical to national security. America needs a reliable domestic supply of electrical steel, in particular grain-oriented electrical steel, known as GOES, for the production of the laminations and cores of electrical transformers. Tariffs or other actions to limit imports of these key transformer components made from electrical steel are necessary to close the loophole that has allowed the circumvention of the steel tariffs currently in place — and to preserve the jobs of those who work in the electrical steel industry.

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The steel industry is beginning to recover from the impacts of the pandemic, although progress has been slow. Meanwhile, the industry remains at risk from growing global steel overcapacity in China and elsewhere, fueled by foreign state-directed investment and subsidies that distort global steel markets and encourage unfairly traded steel to pour into the U.S.

The steel tariffs are necessary to prevent import surges that impair national security, destroy good-paying manufacturing jobs, and undermine the industry that built this country and that continues to be the backbone of America.

Kevin Dempsey is interim president and CEO of the American Iron and Steel Institute (steel.org) in Washington, D.C. He wrote this for the News Tribune.

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Kevin Dempsey

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