U.S. Steelmakers Set To Fight Imports

According to The Wall Street Journal, companies such as U.S. Steel Corp.,
Nucor Corp. and AK Steel Holding Corp. are gearing up their complaints against foreign steel imports, hoping extra tariffs will hold off foreign competitors from gaining market share in parts of the roughly $100 billion U.S. steel market not protected by “Buy American” provisions in the stimulus.

The companies say higher import tariffs are needed to help them survive the global recession and the fallout from the stumbling U.S. car industry, one of their biggest customers. Now, foreign steel imports are subject to low single-digit duties or no tariffs at all.

The stimulus bill effectively shuts out companies from China, Russia, India and Brazil, four of the largest steel exporters, from public contracts. That business will represent an estimated 25% of new steel orders this year and next, the WSJ article said. These countries are expected to “redouble their efforts to get at the rest of the market,” said a senior official in the U.S. steel industry. U.S. industry officials say foreign sellers have begun to sell steel at below production costs to win market share; a practice known as “dumping.”

World Trade Organization (WTO) rules allow countries to raise import tariffs if they can prove dumped goods have directly hurt sales of domestic competitors. Threats to file antidumping cases stem in part from a recent influx of steel used for drilling and pipes. U.S. Steel, a dominant supplier of drilling steel, would be vulnerable to foreign competitors that illegally dumped.

The WSJ says making the case is difficult and requires exhaustive evidence. That could be tough hard as U.S. steel companies turned a healthy profit through the first three quarters of 2008, and orders didn’t start falling until October. Steel companies will likely wait until April to file formal dumping complaints.

If U.S. officials decide to impose tariffs, duties could total more than 100% of final prices, say trade lawyers. If higher tariffs are levied, affected countries will likely appeal to the WTO.