A probe to investigate whether steel imports pose a threat to the national security of the United States has been ordered by President Donald Trump. The legality of the investigation is based on a trade law enacted in 1962 which gives authority to the president to impose a restriction on imports in situations where national security is at stake.
“This has nothing to do with China. This has to do with worldwide, what’s happening. The dumping problem is a worldwide problem,” Trump said.
On the campaign trail for the U.S. presidential election Trump regularly accused China of shortchanging the United States with regards to trade. A recent meeting with the Chinese president, however, seems to have changed his tone on the world’s second biggest economy.
While signing the executive order that authorizes the probe, Trump was joined in the Oval Office by executives in the steel sector. Trump added that the possibility was high that the investigation could be completed in under 50 days rather than the nine months which the law had prescribed. Following the signing of the executive order, the stocks of steel firms appreciated. U.S. Steel Corporation, for instance, rose by over 8% after the signing.
Free trade interests
Wilbur Ross, the Secretary of Commerce, said the probe would seek to balance national security interests and free trade interests adding that scaling up the United States military was critical. The Commerce Secretary observed that imports of steel increased by close to 20% earlier in the year with the bulk of the imports hailing from China. Imports now constitute about 26% in the U.S. marketplace. Ross said that the Chinese imports had continued to increase despite pronouncements in the world’s most populous country that the steel capacity would be reduced.
One of the steel executives who attended the Oval Office ceremony included the chief executive officer of U.S. Steel Corporation, Mario Longhi. The CEO praised the president for appreciating that steel was not only important to the economy of the United States but also to its national defense.
Free market advocates and trade experts were, however, not convinced by the reasons given for the probe with some of them saying that it was a roundabout way of limiting imports. This included Gary Hufbauer who served in the Jimmy Carter administration. Hufbauer expressed skepticism that it was a national security matter and instead said the executive order was a result of industry lobbying.