02-18-2025

Adjusting Imports of Steel Into the United States

ProclamationView the Original .pdf
View the Original .pdf

The 1-Minute Brief

What: This proclamation terminates existing alternative agreements with several countries regarding steel imports and subjects them to a 25 percent ad valorem tariff. It also expands the scope of steel "derivative" products subject to the tariff and ends the product exclusion process.

Money: While a specific Congressional Budget Office (CBO) score for this proclamation is not available, the intent is to increase tariff revenue by applying a 25% ad valorem duty to a broader range of steel imports and derivative products that were previously exempt or under a different arrangement. The initial Section 232 tariffs in 2018 were associated with a nearly complete pass-through of the tariff cost to U.S. importers.

Your Impact: If you work in or own a business that uses foreign steel, such as in the automotive or construction industries, you could see increased costs for raw materials. Consumers may eventually see higher prices for goods made with steel. Conversely, workers and companies in the domestic steel industry may see increased demand and production.

Status: This proclamation was signed on February 10, 2025, and its provisions, including the termination of alternative agreements and the application of new tariffs, are set to become effective at 12:01 a.m. eastern time on March 12, 2025.

What's Actually in the Bill

This executive proclamation fundamentally alters the landscape of steel imports into the United States by revoking prior exemptions and expanding the reach of tariffs initially established in 2018. The core function is to replace negotiated agreements, such as quotas and tariff-rate quotas, with a uniform 25% tariff on steel imports from a wide range of countries, including key trading partners.

Core Provisions:

  • Termination of Alternative Agreements: As of March 12, 2025, previous arrangements with Argentina, Australia, Brazil, Canada, the European Union, Japan, Mexico, South Korea, and the United Kingdom are terminated. All steel articles from these countries will be subject to the 25% ad valorem tariff.
  • End of Ukraine's Exemption: The temporary exemption from tariffs for steel imports from Ukraine is terminated to prevent what the proclamation calls evasion of duties and abuse that benefits producers in other countries.
  • Expansion to Derivative Products: The 25% tariff is extended to a new list of "derivative steel articles," which are downstream products made from steel (e.g., fabricated structural steel, prestressed concrete strand). For some of these new articles, the effective date is pending certification from the Secretary of Commerce.
  • Elimination of the Exclusion Process: The process that allowed U.S. companies to request exclusions from the tariffs for specific products not sufficiently available domestically is terminated immediately. Existing exclusions will expire, and all future imports will be subject to the tariff.

Stated Purpose (from the Sponsors):

The proclamation states its goal is to protect U.S. national security by strengthening the domestic steel industry.

  1. The stated purpose is to address the "threatened impairment of the national security" caused by the quantity and circumstances of steel imports.
  2. It aims to reverse the trend of increasing steel imports from countries with alternative agreements, which the proclamation argues have undermined the effectiveness of the original tariffs and depressed domestic steel industry performance.
  3. A key objective is to enable the domestic steel industry to achieve and sustain a capacity utilization rate of at least 80%, a level deemed necessary for national security in the original 2018 Commerce Department report.

Key Facts:

Affected Sectors: Steel, Manufacturing, Automotive, Construction, Technology, Consumer Goods.
Timeline: Key tariff changes and termination of agreements are effective March 12, 2025. Other derivative product tariffs will be effective on a date to be announced by the Secretary of Commerce.
Scope: The proclamation applies to steel and specified derivative steel imports from all countries, revoking previous exemptions for major U.S. trading partners.

The Backstory: How We Got Here

Timeline of Events:

The Section 232 Era (2018-Present):

  • March 2018: Citing a Department of Commerce investigation under Section 232 of the Trade Expansion Act of 1962, the Trump administration imposes a 25% tariff on most steel imports, arguing that reliance on foreign steel threatens national security. This move allows the American steel industry to restart idle mills and rehire workers.
  • 2018-2024: The U.S. negotiates "alternative means" to address the issue with key allies, leading to exemptions, quotas, and tariff-rate quotas for countries like Canada, Mexico, the EU, Japan, South Korea, and others. During this time, many country-wide and product-specific exemptions are granted, which critics argue erodes the effectiveness of the initial tariffs.
  • 2021-2024: Despite the tariffs, steel import volumes from exempt countries increase. The domestic steel industry's capacity utilization, after briefly hitting 80% in 2021, falls back down. The administration notes a surge in imports from China and accuses countries like Mexico of transshipping steel from nations still subject to the tariffs.
  • February 10, 2025: President Trump signs Proclamation 10896, arguing that the alternative agreements have failed and that a return to broad-based tariffs is necessary to achieve the original national security objectives.

Why Now? The Political Calculus:

  • The proclamation argues that a course correction is needed because the system of exemptions and alternative agreements has failed to bolster the domestic steel industry to the target level.
  • There is pressure from the domestic steel industry, which has consistently supported the tariffs and advocated for closing loopholes.
  • The administration views the move as a way to end unfair trade practices, such as global dumping and government subsidies by other nations, particularly China, which have led to global overcapacity.

Your Real-World Impact

The Direct Answer: This directly affects the U.S. steel industry and companies that use significant amounts of steel, with secondary effects likely reaching consumers through price changes.

What Could Change for You:

Potential Benefits:

  • For those employed in the American steel industry, this could lead to greater job security and potential job creation as domestic production increases to meet demand.
  • The domestic steel industry may see billions of dollars in new investment and modernization projects.
  • Supporters argue this will create a more level playing field for American steel producers and workers.

Possible Disruptions or Costs:

Short-term (First 1-2 Years):

  • U.S. manufacturers that rely on imported steel or specific steel components will face higher costs, potentially reducing their competitiveness.
  • The price of consumer goods that contain significant amounts of steel, such as cars and appliances, could increase.
  • Some economists project job losses in steel-consuming industries that could outnumber jobs gained in the steel-producing sector.

Long-term:

  • The action could lead to a permanent restructuring of supply chains as companies seek to source more steel domestically or from tariff-exempt sources, if any emerge in the future.
  • It may lead to retaliatory tariffs from affected trading partners, impacting U.S. exporters.

Who's Most Affected:

Primary Groups: Domestic steel producers, steel importers, and downstream manufacturers (automotive, construction, appliance manufacturing).
Secondary Groups: U.S. consumers, workers in manufacturing sectors, and U.S. exporters who may face retaliatory tariffs.
Regional Impact: States with a significant presence of steel mills, such as those in the "Rust Belt," and iron ore mining regions like Minnesota's Iron Range may see economic benefits.

Bottom Line: This proclamation is designed to protect the domestic steel industry from foreign competition, which could boost jobs and investment in that sector, but at the cost of higher prices for businesses and consumers who use steel products.

Where the Parties Stand

Republican Position: "Protecting American Industry"

Core Stance: The Republican party has shown a significant divide on this issue, though the executive branch has pursued the tariffs aggressively.
Their Arguments:

  • ✓ Proponents argue the tariffs are crucial for national security and to counteract unfair trade practices from countries like China.
  • ✓ Supporters believe the policy will lead to reshoring of manufacturing jobs and revitalize the American steel industry.
  • ⚠️ Some Republicans have expressed concern that broad tariffs are essentially taxes on American businesses and consumers, risking jobs in other industries.
  • ✗ Free-trade-oriented Republicans oppose the measure, arguing it will hurt the broader economy and invite retaliation.

Legislative Strategy: The executive action was taken by proclamation. Some Republicans in Congress have sought to expand the tariffs to cover more products, while others have warned against the economic consequences.

Democratic Position: "Misguided and Harmful"

Core Stance: Democrats have generally been critical of the Section 232 tariffs, especially as applied to allies, advocating for more targeted approaches.
Their Arguments:

  • ✓ Some Democrats, particularly those from states with a strong union and manufacturing base, have supported measures to protect the steel industry from dumping.
  • ⚠️ Many Democrats are concerned about the impact on U.S. consumers and downstream industries.
  • ✗ The dominant view within the party is that the unilateral tariffs alienate key allies and should be rolled back in favor of negotiated, multilateral solutions.
  • ✗ They argue the policy has been disruptive and has not achieved its stated goals, while increasing prices for American families.

Legislative Strategy: The New Democrat Coalition has been particularly vocal in urging the administration to eliminate the tariffs and work with allies. Their focus is on moving away from what they term the "misguided trade policies" of the Trump administration.

Constitutional Check

The Verdict: ✓ Constitutional (per current judicial precedent)

Basis of Authority:

The proclamation is based on Section 232 of the Trade Expansion Act of 1962.

Relevant Portion of the Constitution: The primary constitutional authority for foreign trade regulation rests with Congress under the Commerce Clause (Article I, Section 8, Clause 3): "[The Congress shall have Power] To regulate Commerce with foreign Nations..."

However, through Section 232, Congress has delegated authority to the President to impose trade restrictions if an investigation finds that imports threaten to impair national security.

Constitutional Implications:

[Delegation of Authority]: The key legal question is whether Section 232 represents an unconstitutional delegation of legislative power from Congress to the President.
[Precedent]: Federal courts, including the U.S. Court of Appeals and the Court of International Trade, have repeatedly upheld the constitutionality of Section 232, affirming the President's authority to impose tariffs under the statute.
[Federalism]: This action is within the federal government's purview over international trade and does not directly overstep powers reserved for the states.

Potential Legal Challenges:

Legal challenges are likely to continue from affected industries and importers. However, given past court rulings, overturning the proclamation on constitutional grounds appears unlikely. The main arguments have been that the term "national security" is interpreted too broadly and that the connection between steel imports and military security is tenuous. Despite these arguments, courts have so far deferred to the executive branch's determinations.

Your Action Options

TO SUPPORT THIS BILL

5-Minute Actions:

  • Call Your Rep/Senators: Capitol Switchboard: (202) 224-3121. "I'm a constituent from [Your City/Town] and I urge [Rep./Sen. Name] to support the President's Section 232 actions on steel to protect American jobs."

30-Minute Deep Dive:

  • Write a Detailed Email: Contact members of the Senate Committee on Finance and the House Committee on Ways and Means, who have jurisdiction over trade policy.
  • Join an Organization: Groups like the American Iron and Steel Institute (AISI) and the Steel Manufacturers Association (SMA) are strong advocates for these tariffs.

TO OPPOSE THIS BILL

5-Minute Actions:

  • Call Your Rep/Senators: Capitol Switchboard: (202) 224-3121. "I'm a constituent from [Your City/Town] and I urge [Rep./Sen. Name] to oppose these broad steel tariffs, as they will harm American manufacturers and consumers."

30-Minute Deep Dive:

  • Write a Letter to the Editor: Submit a letter to your local newspaper outlining how higher steel prices could negatively impact your community or local businesses.
  • Join an Organization: Large business coalitions like Americans for Free Trade represent a wide range of industries opposed to broad tariffs. The National Foreign Trade Council is another key group.