The sustained enforcement of steel tariffs under President Joe Biden is crucial for the US steel industry's growth as it maintains ongoing reinvestment in domestic capacity, American Iron and Steel Institute CEO Kevin Dempsey said Feb. 2.
"As the US economy grows, if we don't have the [Section 232 steel tariff] program in place, we are going to see a new surge in imports that is going to be devastating at a point when the industry is making significant new investments in new capacity and important improvements," Dempsey told attendees during a virtual presentation for the Tampa Steel Conference.
Dempsey said the 25% steel tariffs imposed in 2018 by former President Donald Trump have been instrumental in lowering import surges over the last decade and boosting the domestic steel industry's capacity utilization.
"Those tariffs really allowed us to recover from a recurring set of steel import surges that had damaged the industry and really weakened our situation," he said. "As a result of the tariffs, we saw capacity utilization in the US rise from a 74% average in 2017 up to about nearly 90% in 2019."
The negative impacts of the coronavirus pandemic in 2020 caused steel capacity utilization to fall to about 51% in May of that year, but utilization has since returned to about 77% in January, Dempsey added.
However, as the global economy recovers from the pandemic, steel overcapacity in foreign countries threatens to fuel a renewed surge of steel shipments to the US if tariffs are removed.
"Past experience shows that when we have faced global demand shocks like the Asian financial crisis in the late 1990s, that has been followed by surges of imports into the US," Dempsey said, adding that a similar trend occurred following the financial crisis of 2008-09. "They shipped to the US seeking to sell unsold steel and that led to the surges in the late 1990s."
Source : https://www.spglobal.com/platts/en/market-insights/latest-news/metals