The U.S. government on Friday announced substantial punitive tariffs on hundreds of millions of dollars worth of steel products imported from South Korea and eight other countries.
The much-anticipated decision marks one of the largest dumping cases in recent memory and could embolden domestic steel makers to file more claims of unfair pricing against foreign shippers.
Steel from the nine countries will be hit with tariffs of up to 118%, but the lion’s share of imported steel products in this case, from South Korea, were levied much smaller duties of 10% to 16%.
In the short term, the decision is expected to curb steel imports and lift prices of certain steel goods that could be felt by American businesses and consumers -- and it could help restore a few hundred steel factory jobs that were idled because of pressures from imports.
But any relief to domestic steel manufacturers is likely to be short-lived, analysts say.
Underlying the new threat to the U.S. steel industry are fundamental challenges in a global economy that is adjusting to a worldwide glut of steel, China’s slowing demand and the uncertainties of America’s shale gas boom.
The nation’s energy revolution was supposed to be a godsend for the domestic steel business and its long-beleaguered workers, thanks to soaring orders from the oil and gas industry for specialized steel pipes and tubes used for drilling and other purposes.
“We have this energy boom, we should be making all kinds of money,” said Cliff Tobey, 40, a third-generation miner in northeast Minnesota’s Iron Range, the source of most of the taconite for steel made in the U.S.
Instead Tobey and thousands of other steelworkers across the nation are worried about their job security. They've held rallies in recent weeks to call on federal officials to impose duties on cheap foreign goods.
“I’m happy with the outcome,” he said Friday upon learning of the ruling. “I’m happy they found what we said was true.”
There’s little doubt that the surge of imports has undercut some of the expected benefits for American producers such as United States Steel Corp. As fracking and other techniques to tap natural gas and oil has sharply boosted demand for steel tubes used for drilling and building pipelines, imports of these products from the nine countries topped $1.7 billion last year, more than a jump of 31% from 2010.
South Korea has been by far the dominant shipper, with India, Vietnam and Turkey also showing substantial increases. The biggest dumping duty, 118%, was levied on steel from Thailand, which had the smallest share of imports to the U.S. among these nine countries. The other affected countries are the Philippines, Saudi Arabia, Taiwan and Ukraine.
Worldwide, China is a leading producer and exporter of various steel items, but the country didn’t figure into Friday’s announcement because the U.S. had already levied big anti-dumping tariffs on its tubular steel goods in 2010, which virtually halted its imports in that category.
But a deeper look at the industry also tells the story of a U.S. steel market that is out of sync with global trends, which have seen declining steel prices as Chinese real estate construction has softened.
Despite an international oversupply, U.S. Steel Corp. and other domestic operators charged substantially more than global competitors for these tubular goods. That's possible, analysts say, because the industry has gone through severe restructuring over the decades and is now not only more lean and productive, but also more concentrated with greater ability to dictate prices.
Roger Schagrin, a Washington attorney for Boomerang, Energex Tube and other domestic steel producers, said Friday that the tariffs on South Korean steel “are going to provide significant volume and price benefits for the U.S. industry.”
Officials at the South Korean Embassy in Washington and attorneys for Hysco and Nexteel, the two Korean steelmakers cited for dumping, did not immediately respond to requests for comment.
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