However, experts have suggested that the real threat to American steel could be the President's own environmental policies, as reported by the Daily Caller News Foundation.
President Biden recently pledged to prevent the acquisition of U.S. Steel by the Japanese Nippon Steel Corporation, aiming to keep the company under American control. He also proposed tripling tariffs on Chinese steel from 7.5% to protect domestic industry. However, experts who spoke to the DCNF believe that these proposals will not significantly strengthen the steel industry. Instead, they argue that the administration's environmental policies promoting "green steel" could seriously undermine its competitiveness.
April 23, 2024
E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF, “Unfortunately, Biden’s proposed tariffs don’t solve the problem of the US steel industry’s uncompetitiveness to nations other than China. Our inability to compete has been driven mostly by excessive regulation, especially ‘green’ ones pushed by this administration and their lackeys. The best thing this administration could do if they actually wanted to help American steel workers would be to roll back the onerous regulations that have made it impossible for those workers to compete on the world stage.”
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In March, the Environmental Protection Agency (EPA) announced the final amendments to a new rule that sets national emission standards for air pollutants resulting from iron and steel manufacturing. This regulation, along with two other proposed environmental restrictions on the steel industry, was opposed by a bipartisan group of eight senators in a letter sent in December to the head of the EPA. They argued that these rules would not meaningfully reduce emissions and would push companies overseas.
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The senators wrote in the letter, “We have serious concerns with these proposed rules because they would dramatically undermine the domestic steel industry and national security while driving production overseas likely resulting in no net reduction in emissions from the steel industry globally. American steel manufacturers take seriously their commitment to protecting the environment; however, rules that drive production overseas are bad for our economy, bad for national security, and bad for the environment.”
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In February 2022, the Biden administration announced several new actions to support “low-carbon production” of steel and aluminum, which could be used to fuel other green products like electric vehicles, wind turbines, and solar panels. The president also initiated negotiations with the European Union to create trade standards based on emissions in the production of steel and aluminum.
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The arrangement with the EU would restrict U.S. access to higher-emission steel and limit American companies’ ability to export higher-emission steel. The Trump administration had imposed 25% steel and 10% aluminum tariffs on the European Union in March 2018 to protect domestic production, which Biden removed in October 2021, according to the New York Times.
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The president also recently announced $1.5 billion in subsidies for six projects exclusively for producing clean iron and steel, which costs more to produce.
Regulations, experts argue, do more to hamstring the American steel industry than foreign competition.
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Less than 2% of steel imported into the U.S. in the last year as of April 1 has been from China, making it the ninth biggest source of steel for the country, according to data from the Department of Commerce. Over half of all steel imported into the U.S. comes from either Canada, Brazil, or Mexico.
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Clark Packard, research fellow in the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute, told the DCNF, “I don’t think the Biden administration’s steel tariff announcement will have much of an economic impact. The reason is actually pretty simple: since 2014, the United States has levied a series of tariffs on Chinese steel — antidumping/countervailing duties (trade remedies), the Section 232 ‘national security’ tariffs and then the Section 301 tariffs — and as a result, very little Chinese steel enters the U.S. to begin with.”
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However, the United Steel Workers union has come out in favor of Biden’s recent tariff plan, calling it “worker-centered.” Biden and former President Donald Trump have both vied to gain the support of union workers, with the president pledging the night before the 2020 election to be the “most pro-union president you’ve ever seen.”
Packard told the DCNF, “This is all about electoral politics and the 2024 presidential campaign. The Biden camp did this to help blunt the inevitable criticism from the Trump campaign that they’re globalists.”
The Biden administration argues that since China accounts for nearly 50% of global steel production and its prices are 40% lower than those of American firms, depressed global prices from Chinese sources will harm American manufacturers. China, in the midst of its current economic woes, has resorted to pumping out cheap exports to fuel its economy, with the administration arguing that tariffs would level the playing field.
Lael Brainard, director of the National Economic Council, told reporters in April, “China’s policy-driven overcapacity poses a serious risk to the future of the American steel and aluminum industry. China cannot export its way to recovery. China is simply too big to play by its own rules. In manufacturing sectors like steel, China is already producing more than China or the world can easily absorb. China’s subsidies and other forms of support lead to exports flooding global markets at artificially low prices, undercutting American steel that is cleaner.”
Packard told the DCNF, “Blocking Nippon’s acquisition of U.S. Steel is really misguided. Japan is not a national security threat to the United States, and Nippon is a private firm, not an adjunct of the Japanese government. The U.S. provides a security guarantee to Japan — we’re willing to use nuclear weapons to defend Japan if necessary, but a private Japanese steel company can’t acquire an American steel company?”
The proposed acquisition has faced scrutiny from both the left and the right, with a group of Republican senators immediately following the announcement of the deal sending a letter to Treasury Secretary Janet Yellen saying Nippon Steel’s “allegiance lies to a foreign state.”
Oren Cass, executive director of American Compass, told The American Conservative in December, “You ultimately have a problem where Nippon Steel, itself a recipient of massive industrial subsidies and support from the Japanese government, has no concern for the interests of American workers, or for that matter, the well being of America. To pretend that there’s no relationship between who owns and controls and makes decisions about our most vital industrial assets and what the outcome for those assets is going to be is just bizarrely naive.”
Nippon Steel argues that U.S. Steel will remain primarily an American company, with its headquarters remaining in Pittsburgh, Pennsylvania, and its products mined and melted in the U.S. Through the deal, Nippon Steel is offering at least $1.4 billion in investment to American steel production.
Trump has signaled that if elected again in 2024, he will put in place sweeping tariffs on all foreign goods, hinting that it could be around 10%. The former president has indicated that he would use the proceeds of the tariffs to lower domestic costs for businesses, like taxes.
Biden criticized tariffs in 2020, particularly the ones that Trump put in place on China, noting that they have hurt industries like manufacturing and agriculture, according to Forbes.
Manufacturing jobs have stayed largely stagnant since October 2022, when they rebounded from huge losses seen during the COVID-19 pandemic, according to the Federal Reserve Bank of St. Louis. The number of Americans employed in manufacturing totaled 12,956,000 in March, compared to 12,930,000 in October 2022, a difference of just 26,000.
Antoni told the DCNF, “Ironically, the only way under the current regime for the industry to still exist in the United States and employ American workers will likely be for Nippon Steel or another foreign company to buy our once-great companies. Again, this is a function of our burdensome regulatory state. If Biden’s visions of ‘green’ energy, environmentalism, and trade were to actually be realized, there would be no American steel industry left, just like there would be no fossil fuels.”
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