Free trade groups write open letter to Trump condemning steel import tariffs

  • Six free trade advocacy groups wrote an open letter to President Donald Trump urging him not to impose tariffs on steel and aluminum imports from overseas.
  • The letter followed a recommendation delivered last week by the Commerce Department that would set broad limits on imports of the commodities on national security grounds.
  • Trump campaigned on the promise of reviving long-battered U.S. industries like steel, gaining support through a protectionist agenda that has worried some conservatives.
A Chinese worker cutting steel in Qingdao in China's eastern Shandong province.
AFP | Getty Images
A Chinese worker cutting steel in Qingdao in China's eastern Shandong province.

Six free trade advocacy groups wrote an open letter to President Donald Trump on Thursday urging him not to impose tariffs on steel and aluminum imports from overseas.

The groups, who favor limited government and free enterprise and swing to the right on economic issues, called the economic case for the recently proposed import restrictions "weak" and warned that, rather than help protect American jobs, it would significantly hurt them.

The letter followed a recommendation delivered last week by the Commerce Department that would set sweeping new limits on imports of the commodities, arguing that relying on supplies from abroad could threaten U.S. national security and defense-related manufacturing capacity at home.

"The national security case to restrict steel and aluminum imports is thin and the toll such restrictions would take on the economy is considerable," the letter said, adding that a thorough assessment of America's suppliers, treaties and other agreements "makes clear that steel and aluminum imports do not jeopardize national security."

The six signatories, which ranged from avowedly conservative and libertarian to non-partisan, are the American Legislative Exchange Council (ALEC), ALEC Action, the R Street Institute, the Competitive Enterprise Institute, FreedomWorks and the National Taxpayers Union.

A protectionist pledge

Trump campaigned on the promise of reviving long-battered U.S. industries like coal, steel and manufacturing, which hemorrhaged millions of jobs nationwide from the late 1970s onward as both automation and cheaper imports from overseas, particularly China and Japan, forced local factories to shut down.

"China is dumping steel all over the United States, okay? It's killing you," Trump told a crowd in the historic steel town of Pittsburgh, Pennsylvania, while on the campaign trail in 2016.

Much of the president's electoral support came on the back of his protectionist pledge to cut out foreign competition, even though it stands in stark opposition to his Republican party's traditional free trade orthodoxy.

"The economic case for steel and aluminum tariffs or other import restrictions is weak," the free trade advocates' missive said. It argued that the proposed tariffs — at least 24 percent on all steel imports and 7.7 percent on all aluminum imports globally, or larger tariffs of 53 percent on steel and 26.3 percent on aluminum against select countries including China, Brazil, India, South Korea and Russia — "would hurt downstream domestic manufacturers" by raising their costs, as well as trigger a "tit-for-tat game of foreign retaliation."

The organizations cited 2015 census data showing that steel mills employed roughly 140,000 Americans and added $36 billion to the economy, while "steel-consuming industries, including manufacturers who rely on steel imports, employ 6.5 million Americans and add about $1 trillion to U.S. gross domestic product (GDP)."

"Raising costs on manufacturers will jeopardize far more jobs than could possibly be saved by imposing steel tariffs or other restrictions," the letter said.

ArcelorMittal is recruiting to hire more than 1,000 workers in 2018, many of them in Indiana.
Source: Larry Collins
ArcelorMittal is recruiting to hire more than 1,000 workers in 2018, many of them in Indiana.

Steel industry leaders, on the other hand, are staunchly behind the proposed measure. In early February, executives from the American Iron and Steel Institute (AISI) wrote a letter calling on Trump to forge ahead with Section 232 recommendations to "stop the relentless inflow of foreign steel."

The U.S. is the world's biggest steel importer, while China produces half the world's supply of it. The American company leaders stressed the need to control the current global supply glut, which has been compounding pressure on U.S. steelworkers.

In 2017, imported steel took 30 percent of the U.S. market. Still, although China is a frequent target of Trump's trade ire, the U.S. actually imports most of its steel from Canada at 16 percent, followed by Brazil, South Korea, Mexico and Russia. China doesn't even crack the top five.

China warned last week that it would "take action" if the U.S.' decision affected its interests, while European Commission President Jean-Claude Juncker said that the EU would enact similar measures in retaliation. Trump has until April to act on the recommendations.

Meanwhile, some of the president's "America first" vows have gone quiet, particularly one that would have required U.S. pipeline producers to buy American-made steel. Manufacturers and many conservatives condemned it, arguing this would force costs up and interfere in free market decisions. The proposed measure has been dropped from speeches and was not mentioned in Trump's infrastructure plan.