US metal imports fall since 2018 tariffs, but other factors at play: ITC
The US International Trade Commission said US metal imports have dropped and domestic steel and aluminum production has grown since various tariffs were imposed in 2018, but other factors besides the tariffs have also likely contributed to these trends, according to a report released March 15.
“Overall, the data generally shows a decrease in imports and an increase in production and prices since the imposition of section 232 and 301 tariffs,” the ITC said. “However, when observing the data on a more granular level, trade, production, and prices for both steel and aluminum display many unexpected fluctuations for several reasons.”
Former President Donald Trump in 2018 imposed ad valorem tariffs of 25% on steel imports and 10% on aluminum imports from most countries under Section 232 of the Trade Expansion Act of 1962, a trade mechanism that allows such actions on imports if they are deemed a threat to national security. The tariffs have since been removed, temporarily suspended or replaced with quota deals on a case-by-case basis with multiple trade partners.
Also in 2018, various tariff rates were imposed on dozens of imported products from China under Section 301 of the Trade Act of 1974. Multiple steel and aluminum products were included within the scope of the tariff action.
The ITC said US steel and aluminum imports in 2021 decreased by 17.2% and 19%, respectively, from levels in 2017, the year before the tariffs were imposed. Meanwhile, production and capacity utilization in both industries ultimately rose in that same period despite fluctuations.
“Although domestic steel capacity utilization was growing before the tariffs, it increased more rapidly beginning in 2018, reaching a 14-year high in 2021,” the ITC said. “Investment announcements from a variety of producers since the imposition of the tariffs indicate that production and capacity will likely continue to increase in the coming years.”
“Primary aluminum smelter capacity utilization increased by more than 20 percentage points between 2017 and 2019,” the commission added. “Although it has fallen somewhat since then, it was still about 15 percentage points higher in 2021 than pre-tariff levels.”
US steel and aluminum import volumes have since risen in 2022 from levels in 2020 and 2021, but they remain below 2017 numbers.
US steel imports totaled about 28 million mt in 2022, up from 20 million mt in 2020 but down from almost 34.68 million mt in 2017, according to Commerce Department data.
Aluminum imports have followed a similar trend, reaching over 6.8 million mt in 2017 before falling to under 5 million mt in 2020 and rebounding to over 6.3 million mt in 2022.
Impact of other factors
Other factors impacting the industries “have likely, in some cases, had larger impacts on steel and aluminum markets than the tariffs,” the ITC said.
“First, purchasers may not have been able to immediately switch suppliers in response to the tariffs, because they often have long-term contracts in place with suppliers or require particular product specifications to which a new supplier would not be able to adhere right away,” it said.
“Second, industry representatives claim that uncertainty regarding how long tariffs under sections 232 and 301 would remain in effect led to slower response times in terms of investing in and increasing domestic capacity,”
The ITC said that the coronavirus pandemic, surging energy prices, Russia’s invasion of Ukraine, an increasing focus on sustainability and the US’ slate of antidumping and countervailing duty orders on steel and aluminum products have all also influenced import levels and domestic production trends in the US.
“These factors and their impacts… underline the difficulty of using trends in trade, production, and prices without engaging in an economic model that can make efforts to disentangle the effects of the tariffs from other factors,” the commission said.
US steel and aluminum prices in 2021 were higher than 2017 levels, although prices for both metals in the domestic and global markets experienced a great deal of volatility in that period due to aforementioned factors related to the pandemic and geopolitics, according to the ITC.
These same factors caused fluctuating demand and operational challenges among key metal end-user industries, adding further instability to the markets, the ITC added.
The Platts US steel hot-rolled coil index ended 2021 at $1,500/st, compared with $646.75/st at the end of 2017, according to S&P Global Commodity Insights data.
The Platts spot 99.7% P1020 US Aluminum Transaction Premium was assessed at 30.15 cents/lb at the end of 2021, up from 9.5 cents/lb at the end of 2017.