(Photo: AP/John Minchillo)
Workers listen as Ivanka Trump, daughter of Republican presidential candidate Donald Trump, attends a round-table discussion with local businesswomen after touring Middletown Tube Works, a welded steel tube supplier, Thursday, Oct. 6, 2016, in Middletown, Ohio.
As a presidential candidate, Donald Trump upended the GOP's traditional free-market talking points on trade and promised to implement a bold new trade agenda that put the American manufacturing industry—and its workers—first.
His tough trade talk likely helped him win the presidency by breaking through the Democrats' “blue wall” to capture states like Michigan, Ohio, Pennsylvania, and Wisconsin, which for years have been crippled by manufacturing plant closures, slowdowns, and resultant pink slips.
One year into his presidency, Donald Trump has failed to follow through on one of those core campaign promises: to crack down on China's dumping of steel into the United States, which has devastated the American steel industry and killed tens of thousands of steel jobs in the industrial Midwest.
But a firm deadline is now on the horizon: Trump now has fewer than 90 days to take some sort of action on steel trade policy. What that action will be—and whether it even happens—remains to be seen. “We don't have clue what they will do, to be honest,” says one U.S. trade official who supports greater trade restrictions on China, and who wished to remain anonymous because of the sensitivity of the issue.
Behind the scenes, there is an ideological struggle in the White House. Trade hawks like Commerce Secretary Wilbur Ross and United States Trade Representative Robert Lighthizer are lobbying Trump to enact robust trade restrictions on steel imports, while Wall Street free marketers like Gary Cohn and Steve Mnuchin warn that such action will upset global markets and spark a trade war.
Since taking office, both industry and labor advocates have called on the Trump administration to take swift action to help aid American metal producers.
“It's time now for the President to take action to fix our failed trade policies, protect our industrial base and national security, and revitalize our infrastructure and create good-paying jobs,” Leo Gerard, president of the United Steelworkers union, said in a statement earlier this month. “The time for talk and debate has passed and the president should act boldly.”
Last April, Trump ordered his Commerce Department to conduct dual investigations into foreign steel and aluminum imports to determine whether, under an obscure trade law provision known as “Section 232,” reduced domestic production capacity poses a national security risk and thus permits trade restrictions. The results of the investigation were supposed to be released in June, but the White House has repeatedly delayed and deferred. This month, the Commerce Department finally sent both reports to the White House, triggering a 90-day period in which Trump may act. The reports have not been publicly released, however, and it’s unclear what they say.
Foreign producers are rushing to get product into the United States before any restrictions are imposed—steel imports in 2017 were up about 20 percent through October compared with 2016 and aluminum imports are up 16.5 percent through November.
In consequence, the U.S. steel industry continues to hemorrhage jobs and shut down plants. In September, ArcelorMittal announced that it would lay off 150 of the 207 workers at its steel mill outside Philadelphia. “I told my son, ‘Christmas is going to be kind of scarce, because Mommy’s going to lose her job soon,’” Kimberly Allen, a steelworker with more than 22 years on the job, told The New York Times at the time.
Over the past two decades, China's heavily subsidized industry has flooded the market with cheap steel, prompting other countries with state subsidies and low wages—among them, Korea, Russia, India, Vietnam—to follow suit, explains Robert E. Scott, an expert on trade and manufacturing policy at the Economic Policy Institute (EPI). Between 2000 and 2015, China's steel production increased by 550 percent to 803 million tons a year. That boom accounted for nearly 90 percent of total growth for the entire world’s steel production, according to EPI. China now produces about half of all the world’s steel. This race to the bottom has devastated American steel producers’ ability to compete—and as a result, led to hundreds of factory shut downs and tens of thousands of layoffs. In just the last two years, 14,000 steel jobs have disappeared.
“So far the Trump administration's trade policy has amounted to a lot of talk and little action,” Scott says.
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Ohio Representative Marcy Kaptur, a Democrat, represents a district in the northern part of the state that was once home to tens of thousands of steelworkers. Today, the industry's presence in her district is just a shell of its former self. Poverty in her district is on the rise and average wages have fallen by about $7,000 a year, she says. “We've become a dump market,” Kaptur told the Prospect in an interview. She recalls an emblematic experience from a couple years ago when she was at a morning event in Lorain, with thousands of workers who had been pink-slipped, and then later that day attending an event at a port in Cleveland where foreign steel arrives by ship.
Kaptur has been one of the most outspoken members of Congress pressuring the White House and Commerce Department to speed up its Section 232 investigations. She says Trump’s tough-on-trade campaign message hit home for many workers. “Steel country people were listening to what he was saying,” Kaptur says. “No president that we’ve had or candidate embraced the jobs and trade issue to level that he did.”
However, she adds,
“Since his presidency began, we've gone into deeper steel deficits. His record doesn't match his rhetoric for year one.”
IF REPORTS FIND THAT CHINESE steel dumping and an overcapacity of aluminum do endanger national security, what exactly can Trump do? A whole host of things: Section 232 grants the president a lot of latitude to impose trade restrictions. If he does act, some experts think he will impose a mix of quotas and tariffs on Chinese steel and aluminum.
That alone likely won't be enough to actually fix the trade imbalance. China's steel exports to the United States have slowed down dramatically—in part because the U.S. has already levied several trade sanctions against the country. China is now just the 11th-largest steel importer to the United States, according to recent figures from the Commerce Department. “In order to really deliver on his promise to shield American steel,” Vox's Zeeshan Aleem writes, “he’d have to institute across-the-board tariffs that would prevent all those other close U.S. trading partners, not just China, from being able to export their steel to the U.S.”
Aleem points to President Obama's imposition of up to a 35 percent tariff on Chinese-produced tires to help domestic tire manufacturers. It didn't work: “When Obama's tariffs on China kicked in, imports of tires from South Korea, Thailand, and Indonesia went up to meet American demand—more than offsetting the reduction in Chinese-made tires sent to the U.S.”
EPI's Scott says a broader global approach will be needed. “The problems that the United States faces are shared by other countries that are hurt by China and India and Korea. Ideally, what you want to happen is to impose restrictions that lead to discussions with other countries about tradeoffs,” Scott says. “For example, [Trump] could knock down the U.S.'s quota on Europe if they agree to impose their own restrictions on China.”
The problem is global, after all: The scope of Chinese dumping on the world steel market imperils production throughout the industrialized world.
That would require complex multilateral negotiations on a global scale—something that Trump has not shown himself to be either interested in (as the Paris climate pullout shows) or adept at.
Meanwhile, Trump is hinting at stronger action on trade in the near future. Just this week, he announced tariffs on imported washing machines and solar panels. He has said he will unveil more detailed trade plans in his upcoming State of the Union address.
In a roundtable discussion Tuesday with reporters, AFL-CIO President Richard Trumka emphasized the importance of strong enforcement on any new trade provision. “If there is no enforcement mechanism,” Trumka said, “then they are useless.”
Additionally, it remains unclear just how much influence trade hawks have inside the White House. According to the palace-intrigue purveyor Axios, Wilbur Ross (who was originally Trump's go-to on Chinese trade talks) has lost favor with the president and isn’t seen as much of an influential force on policy.
Trumka said that Trade Representative Lighthizer has been more accessible and aligned with labor's trade agenda than Obama's trade representative, Michael Froman. “Access isn't the problem; impact is,” Trumka said. “So far I don't think we've done very well” on that front.
It's also unclear where the current NAFTA negotiations are headed, but a new deal on NAFTA won't likely bring any relief to workers in the near term, either. "The NAFTA trade discussions will likely center on a long-term rebalancing of trade agenda,” the U.S. trade official says. “Meanwhile, the steel and aluminum 232s are probably the most important short-term trade issues that will help create a floor under market and allow us to grow."
