Here Come the Steel Tariffs

US Steel CEO says tariffs could be needed on Chinese imports

U.S. Steel Corp. and the ailing American steel industry might need tariffs on Chinese-made steel in order to survive, Chief Executive Mario Longhi said in an interview.

“Assume nothing happens, it could put at risk the existence of this industry” in the U.S., he said.

...Mr. Longhi blames the bulk of his latest woes on imports, especially from China. The U.S. imported 615,171 tons of steel from China during that time, up 25 per cent from the same period a year before. Mr. Longhi said a failure to impose more tariffs on Chinese imports was an American political “weakness.”

Central Planning Fails Again

China is putting out more steel because producers have debts to pay and they have surplus capacity thanks to slower and changing economic growth at home.

Executives for U.S. Steel and other steelmakers are lobbying Congress for a change in legislation that would make it easier for domestic companies to obtain protective import tariffs. Mr. Longhi said he believes the legislation has a “50-50 chance” of passing. U.S. Steel has begun to make the argument that a domestic steel industry is essential to U.S. national security, which is starting to gain traction with politicians in Washington, said Suzanne Rich Folsom, the company’s vice president for government affairs.

Imports have been especially hurtful to the company’s business of making steel pipe and tubs for the oil and gas industries. That has also been rocked by oil prices falling almost in half from a year ago. “The oil stuff completely stalled,” said Mr. Longhi. “People are not investing, the number of rigs has been cut down by a half.” Mr. Longhi expects oil prices to recover “on the midterm.” The best guess, he said, is that this year is going to very slow and difficult and they might start to recover next year.”

I don't know if I'd be buying steel producers here, but I'd bet on the tariffs passing Congress. With the trade deal being negotiated, I don't know if Obama would approve it or not. Could make for some interesting political dynamics in the 2016 race. I would bet on the tariffs being approved by early 2017; whether they'd matter by then is another story.