The recent Star Tribune editorial “What happened to Trump steel boom?” (Jan. 9) had the appearance of a political-leaning narrative at the outset of this election year. The editorial failed to acknowledge that trade enforcement is, and has historically been, bipartisan — and for good reason.
Let’s be clear about the root cause of the so-called “protectionism.” Unfair trade practices and illegal dumping have tilted the playing field in the favor of foreign steelmakers, especially China. Both Democratic and Republican White Houses over the last two decades have recognized that enabling cheap foreign steel — supported by massive pollution, shamefully cheap labor, subsidization and currency manipulation — is bad policy.
Those past leaders also took a strong stance to ensure the continued viability of critical industries that serve as the building blocks of our economy and the vanguard of our national security.
The Iron Range was devastated in 2015 by cheap, unfairly traded, dirty, subsidized foreign steel. Long before President Donald Trump came into office, the iron mining and steelmaking industries advocated for trade enforcement action by the federal government, allowing domestic steelmaking to level the playing field with imports that were dumped or illegally subsidized.
Congressman Rick Nolan (a Democrat), Sen. Amy Klobuchar (a Democrat) and organized labor and industry leaders made a bold, impassioned plea for trade enforcement. As a result, President Barack Obama’s administration imposed tariffs as high as 500% on Chinese steel, providing a critical lifeline to the iron ore and steel industries.
Unfortunately, China circumvented those tariffs and continued to infect the world with its own low-quality, high-polluting, subsidized steel. Fortunately, the Trump administration recognized the threat to U.S. national security and took further action under Section 232.
A more balanced view of how the steel tariffs are working is to judge the three overarching objectives laid out by the administration with respect to the Section 232 tariffs. Here are those metrics and the results as of year-end 2019:
1. Enable steel producers to operate at about 80% or better of the industry’s capacity utilization rate.
The year-to-date 2019 capacity utilization rates improved and resulted in an 80.1% average, compared to 78.2% during the same period in 2018.
2. Reduce import penetration (imports’ share of domestic steel consumption) to approximately 21% or lower.
For 2019, the finished steel import market share was reported at approximately 19% compared to 23% for 2018.
3. Increase operational efficiency in the near term and improve the financial viability of the industry over the long term.
Since the beginning of 2017, over $17 billion of investment in the iron and steel industry has been announced (including major capital projects on Minnesota’s Iron Range).
By these objective measurements, the Section 232 action has achieved its aims. Steel imports are back to levels deemed reasonable by historic standards and steel industry investment is on the rise.
To suggest, without evidence, that the idling of an inefficient steel mill or a very recent decline in manufacturing is the direct result of steel tariffs, misleads readers and blurs the lines between Section 232 tariffs and impacts from other geopolitical developments (some trade-related). Without meaningful steel tariffs, the Iron Range would not be back in business. The bolstering of iron ore and steel industries has not come at the expense of the broader economy, certainly not in Minnesota with its 3.2% unemployment rate (below the national average).
A viable American steel industry is good for communities on the Iron Range and Minnesota institutions — like the K-12 school trust and university trust — that rely on mineral revenue from iron mining.
Thanks to the Section 232 tariffs and the planned investments, the steel industry is stable and should remain strong. At the beginning of 2020, the American economy is robust, Minnesota is thriving, the Iron Range remains resilient, and Americans can rest assured that the United States will continue to have levels of steel production necessary to support national security.
Kelsey Johnson is president of the Iron Mining Association of Minnesota.