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1 1 (June 7, 2018)

handle is hein.crs/govzcm0001 and id is 1 raw text is: $ Congressional Research Service ~ Informi g he I gislative debate sir ce 1914 S June 7, 2018 Trade Actions and U.S. Steel Manufacturing On March 8, 2018, President Trump signed a proclamation imposing a duty of 25% on foreign-made steel beginning on March 23. The President acted under Section 232 of the Trade Expansion Act (19 U.S.C. §1862, as amended), a decades-old law that allows restrictions, such as tariffs or quotas, on imports that have been found to harm the national security of the United States. Steel Tariff and Quotas Since March 23, 2018, U.S. Customs and Border Protection has been collecting duties on steel imports from China, India, Japan, Russia, Turkey, and Vietnam, among others. However, several major steel suppliers were initially exempted pending negotiations on alternative measures. South Korea and Brazil, the third- and fifth-largest suppliers of U.S. steel imports by value, as well as Argentina, accepted annual quotas in place of the 25% tariff. Australia, a tiny steel supplier to the United States, is permanently exempted from the tariff without any quota limits. On June 1, 2018, the remaining temporary exemptions expired, extending the tariff to other key sources of steel imports, including Canada, Mexico, Germany, and Italy. U.S. Steel Manufacturing Basics In 2017, domestic production of raw steel totaled 82 million metric tons, down from 92 million metric tons in 2008, according to the United States Geological Survey (USGS). U.S. steel production peaked in 1973 at 137 million metric tons, and the United States was the world's top producer. Steelmaking technology has changed significantly over the intervening years. Large integrated steel mills-once the chief producers of steel in the United States-have been declining in importance. By 2017, about a third of domestically produced raw steel was made in integrated steel mills, which use ovens to turn coal into coke and then combine the coke with iron ore to produce pig iron in blast furnaces. The pig iron is then melted in a basic oxygen furnace to produce steel. As the integrated steel sector has consolidated, many mills have closed. Last year, three companies operated integrated steel mills at nine U.S. locations, according to USGS, producing about 26 million metric tons of raw steel. Integrated mills have lost considerable market share to minimills, which use electric arc furnaces to melt raw materials (primarily iron and steel scrap) to produce the majority of steel in the United States. The minimill sector has lower capital and energy costs, and it operates with a largely nonunion workforce. In 2017, 54 companies operated minimills in the United States, producing nearly 56 million metric tons of raw steel. Domestic steel production also includes slab converters. These manufacturers do not make raw steel, but purchase steel slabs and use them to produce hot-rolled, cold-rolled, and galvanized sheet that can then be turned into finished steel products. Semifinished steel products, such as slabs, accounted for about one-fifth of U.S. steel imports in 2017. U.S. Demand for Steel Products Steel is a supplier industry to four main industrial end-use sectors-construction, automotive, energy, and appliances-accounting for more than 80% of combined domestic demand in 2016. The defense industry represented another 3% of demand in 2016, according to the American Iron and Steel Institute (AISI), an industry trade group. The price of steel produced in the United States tends to be higher than that of comparable steel produced in other countries. Over the past five years, the benchmark hot- rolled coil price-a proxy for the price of steel used in everything from bridges to microwaves-has been higher than prices of steel from China and Europe delivered in the United States. A report by the Department of Commerce supporting the Section 232 measures argues that for the nation's steel industry to sustain adequate profitability, support continued capital investment, and boost domestic production, steel producers should operate at a capacity utilization rate of 80% or greater. U.S. steel mills have rarely operated above 80% of capacity since 2008, and have often operated below that level since 1981 (Figure 1). Figure I. Iron and Steel Products Capacity Utilization Percent of Capacity 100% 40% 80% 709% b0% 50% 40% Source: Federal Reserve Board. Steel Industry jobs and Wages In 2017, domestic steel producers directly employed 139,900 workers, accounting for 1.1% of the nation's 12.4 million factory jobs. Over the last decade, U.S. steel manufacturers have shed 13,000 jobs, and the U.S. government forecasts steel industry employment will drop to 125,300 jobs by 2026. Workers in iron and steel mill manufacturing earned an average wage of $78,900 in 2016; the average wage for all manufacturing workers was $64,900. High unionization is a factor that affects industry wages, with close to a quarter of the nation's steel workers covered by union contracts in 2017; for all factory workers, union membership was 10%. :/crsreports.congress.gos

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