How Section 232 Affects Price of Steel

On March 1, of 2018, President Trump announced he would invoke the seldom used Section 232 National Security Provision. This rule would impose a 25% tax on imports of steel as well as a 10% tax on aluminum imports.

Section 232 was initiated to protect American jobs and to proactively keep the nation safe. While it offers several core benefits, one of the major downsides of Section 232 is the potential to increase the cost of steel and aluminum.

U.S. Steel and Aluminum Producers Need Assistance

Over the last few decades, overproduction of cheap steel and aluminum by China has driven prices down and significantly increased pressure on American producers. For instance, almost half of the steel produced in December of 2017 could be outsourced to Chinese mills — according to the World Steel Association.

As a matter of fact, China accounted for more steel than the combined production of Japan, Russia, the United States, and the 28 countries making up the EU. This overproduction of foreign steel has placed the American steel industry in dire straits. However, Section 232 was initiated to restore stability to American steel manufacturers, save American jobs, and to protect national security.

How Is Steel Production a National Security Issue?

Whenever aluminum and steel manufacturers do not function at 80% utilization, the industry is likely to lose the ability to create materials in war-time scenarios. At the same time, functioning below 80% creates additional challenges in terms of the ability to:

  • Innovate and develop new products
  • Improve steel production capacity
  • Bolster efficiencies.

One of the core goals of Section 232 is to restore domestic aluminum and steel production back to at least 80% utilization. By doing so, steel and aluminum manufacturers will be able meet steel demands and provide our troops with the essential equipment in the event of war.

What Are the Benefits of Section 232 for American Steel Production?

Let’s take a look at some of the positive benefits of Section 232.

Increased Profits of American Steel Producers

The 25% tariff on steel imports and 10% tariff on aluminum imports will allow companies who manufacture steel in the United States to produce and sell more steel. This will potentially drive profits and lead to industry growth.

Section 232 Will Save American Jobs

Section 232 will save American jobs and potentially help drive the economy. The increase in the production of steel will either

  • Alleviate the pressure to lay off workers
  • Cause steel and aluminum manufacturers to hire more workers to meet the increased steel demands

As a matter of fact, the Peterson Institute for International Economics estimated the Bush steel tariffs of 2002 saved up to 4,000 steel jobs.

How Is R&B Metal Structures Helping with the Potential Price Increase?

As steel producers nationwide are being forced to increase prices, R&B Metal Structures offers a special money-saving promotion. Each month we run promotions to ease the burden of the increases. Check them out on our Current Promotions page every month.

If you have questions, R&B Metal Structures has answers. Give us a call at 770-775-2254 or complete our online contact form.