A Department of Commerce investigation into steel imports could have a dramatic effect on local ports and industry, especially if it recommends increased tariffs, experts say.
In April, President Trump signed a memorandum asking the Department of Commerce (DOC) to investigate the effects of steel imports on U.S. national security. That investigation continues this month, and may wrap up this fall. But Port of Vancouver officials say any tariffs could significantly impact the region’s steel industry, and that could ripple into other areas of the local economy.
“It has us very concerned,” said Ryan Hart, the port’s chief external affairs officer. “About a third of our total revenue is tied to steel. So when you have conversations on possible steel sanctions, it impacts us as a port.”
The U.S. has no tariffs on steel at the moment, said Hart, but under Section 232 of the Trade Expansion Act, the president is allowed to adjust imports and impose tariffs if a threat is identified.
The DOC study will “consider overcapacity, dumping, illegal subsidies and other factors to determine whether steel imports threaten American economic security and military preparedness,” a release from the administration said.
“This investigation will help determine whether steel imports are making us less safe in a world that is increasingly fraught with geopolitical tensions,” Commerce Secretary Wilbur Ross added in the release.
The Port of Vancouver is the second largest importer of steel products on the West Coast and about 36 percent of port revenues are tied to steel products. The Port of Vancouver imports steel and other products mostly from Russia, Mexico, Canada, South Korea, Taiwan and Japan.
“Most of the stuff we get is from Asia,” said Alastair Smith, the port’s chief marketing and sales officer.
Nationally, Mexico, Canada and Brazil are the United States’ largest importers.
Steel imports through the Port of Vancouver also feed other areas of the country, including the auto industry in the Midwest. The U.S. doesn’t import steel from China due to sanctions against the country that raise tariffs by about 620 percent, Smith added.
“China has been receiving high sanctions for years,” Smith said. “And they say any action above 10 percent makes trade relatively useless.”
Overall, the United States imports about 30 million tons of steel each year – about 19 percent of all steel imported globally – and it doesn’t have the capacity to make up for that sort of loss, Smith said.
“America’s steel mills have not invested in technology the way that Asian steel mills have,” Smith said. “They’re making those investments, but they’re still 20 years behind the times.”
If tariffs increase the price of steel, the lack of availability or increasing costs could cause slow-downs in the region’s bustling manufacturing industry, Smith noted.
“You’re not just talking about revenue issues, you’re also talking about jobs here,” he said.
Among the potential companies or industries that could be affected: screen door makers, coat hanger makers, pipe manufacturers, wind energy companies that use steel sheeting, washing machine makers that use steel for coils, and a whole host of other manufacturers and businesses.
“It goes right through the whole industry,” Smith said.
Another concern is that imposing new tariffs will start a trade war with other countries. That could lead to retaliation and increased costs of agricultural products or other goods.
“About 10 percent of America’s wheat comes through here,” said Abbi Russell, the port’s communications manager. “That’s another potential big ripple.”
There was a similar study on steel imports in 2002 by the Bush Administration, which turned up little to no evidence of any problems, Hart said.
“They found that steel imports have very little impact on national security,” he explained. “I believe broad sanctions would have a much more negative impact on our economy.”
The port is waiting for the Department of Commerce to come out with recommendations, but that process has been delayed more than once and could be delayed again until September or beyond.
“We’ve been hearing every month that it’s coming this week or next week, and now we’re hearing it may not be until after the August recess (in Congress),” Hart said. “Any number of things could be recommended. Our lobbyist in D.C. said he expects Commerce will produce several options.”
That uncertainty is already affecting some trade relations. That’s because generally when sanctions are imposed, they are retroactive to the start of the investigation – meaning importers could face back-taxes if they trade with the United States and then sanctions are imposed, Smith explained.
“Even the threat of sanctions is enough to make people not sell into the U.S. market,” he said, adding that in some cases, companies are just building up inventory volume in warehouses, not trading, because they’re waiting to see what happens.
Rep. Jaime Herrera Beutler (R-Camas) and Sens. Patty Murray (D-WA) and Maria Cantwell (D-WA) have submitted letters to the Department of Commerce on behalf of the port, officials said.
“We’ve been very appreciative of their watchful eyes on this,” Hart said.
Herrera Beutler said she’s watching the situation closely and plans to continue to raise concerns raised by the port.
“I want to see products designed and built in America whenever possible, because I want good-paying jobs to come and stay right here,” Herrera Beutler said. “However, I’ve urged the Department of Commerce to take the unique needs of West Coast employers and workers into account when it comes to sourcing of steel. I was successful in ensuring Kalama’s Steelscape had a voice in a recent Department of Commerce hearing on this topic so it could communicate the importance of being able to access affordable steel and keep hundreds of good paying jobs in our area.”
She added that she’s urging the department to proceed with caution.
“It must ensure it’s guarding against actions that could result in crippling retaliation by strategic trading partners or unaffordable commodity prices that would devastate families in Vancouver and all over our region,” Herrera Beutler said.
Hart said he thinks it’s likely some sort of tariffs will be imposed after the investigation is complete, but it’s hard to tell how broad they will be.
“It’s hard to speculate,” Hart said. “Listening to some of the President’s speeches and us wanting to grow manufacturing jobs domestically, my suspicion is he’s going to do something.”
Late last month, President Trump told the Wall Street Journal that he will likely make a decision on the steel tariffs issue after his administration tackles health care and taxes.
