President Trump triggered an investigation of steel dumping Thursday to learn whether imports from China and other countries threaten U.S. national security, raising the possibility of new tariffs in his first trade move to defend a specific industry.
Surrounded by U.S. steel executives in the Oval Office, Mr. Trump signed a memorandum ordering the Commerce Department to investigate whether imported steel is hurting the production capacity of U.S. manufacturers who are needed for a defense buildup.
“Steel is critical to both our economy and our military,” Mr. Trump said. “This is not an area where we can afford to become dependent on foreign countries.”
Even as they agreed on the need for action, the president and Commerce Secretary Wilbur L. Ross Jr. seemed to disagree about China’s role in steel dumping. Mr. Ross linked the investigation in part to a rise of Chinese steel imports, which now make up 26 percent of the U.S. market.
“Steel imports have continued to rise, despite repeated Chinese claims that they were going to reduce their steel capacity, when instead they have actually been increasing it consistently,” Mr. Ross told reporters. “In the first couple months of this year alone, steel imports rose 19.6 percent. It’s a very serious impact on the domestic industry.”
But Mr. Trump, asked by a reporter whether the probe would complicate his efforts to get China’s help in curbing North Korea’s nuclear weapons program, said the dumping investigation isn’t aimed at China.
“This has nothing to do with China,” Mr. Trump said. “This has to do with worldwide, what’s happening. The dumping problem is a worldwide problem.”
Acknowledging that he was diverging from prepared remarks, Mr. Trump referred to his trip to Wisconsin on Tuesday and spoke out against Canada’s actions under the North American Free Trade Agreement.
“What they’ve done to our dairy farm workers is a disgrace. It’s a disgrace,” Mr. Trump said, adding that it was a result of the NAFTA deal that has been “a disaster for our country.”
“We’ll be reporting back sometime over the next two weeks as to NAFTA and what we’re going to do about it,” the president said.
“We can’t let Canada or anybody else take advantage and do what they did to our workers and to our farmers. So we’re going to have to get to the negotiating table with Canada very, very quickly.”
Mr. Trump is seeking China’s help in pressuring North Korea to scale back its nuclear weapons and ballistic missile development, including a failed missile launch last weekend. Mr. Trump announced last week that his administration would not label China as a currency manipulator despite promises to do just that during his campaign.
Mr. Ross said currency manipulation has nothing to do with the question of steel exports.
“Currency is a totally different issue,” he said. “Steel is an important factor in our infrastructure as it relates to national defense. We have to make our decision based on what’s important to the United States and our security. The important question is protecting our defense needs.”
Administration officials said the move supports Mr. Trump’s campaign pledge to clamp down on foreign steel dumping on the U.S. market that has undercut U.S. jobs. The action sparked a rally of steel stocks in the U.S., and steel executives hailed the president’s move.
John Ferriola, chairman and president of steel producer Nucor Corp., said he had little doubt that countries were illegally or unfairly exporting steel to the U.S.
“What we would like to see this investigation lead to is a level playing field,” Mr. Ferriola said. “We as a country and every one of our companies can very, very successfully compete against any company and any country if we are given a level playing field.”
He attended the signing ceremony with a dozen other steel industry executives.
Mr. Ferriola said he was “very impressed” with Mr. Trump’s focus and attention to detail on the steel issues and his drive to create U.S. jobs. He said he couldn’t compare the experience with that of Mr. Trump’s predecessor.
“I’ve never met with President Obama,” Mr. Ferriola said. “I was never invited.”
Republican congressional leaders praised the president’s move, and some Democratic lawmakers gave Mr. Trump grudging support. Rep. Rosa L. DeLauro, Connecticut Democrat, called the investigation “a step forward” but added that Mr. Trump has backed off promises to use only U.S.-made steel in the Keystone XL pipeline and to label China a currency manipulator.
“Our workers have been crushed by the Chinese steel overcapacity dumped into American markets, and millions of good-paying jobs have been lost,” Ms. DeLauro said. “The hundreds of thousands of workers and communities in America who depend upon the steel industry deserve real enforcement of our laws to hold bad actors accountable.”
Sen. Rob Portman, Ohio Republican, said worldwide steel overcapacity is particularly hurting his state, where more than 1,500 steelworkers have been laid off over the past two years. He said Congress and the administration must “protect Ohio jobs and stop trade cheats from unfairly trading steel into the U.S. market.”
While administration officials wouldn’t discuss the likelihood of new tariffs on steel imports, House Ways and Means Committee Chairman Kevin Brady, Texas Republican, said the pending report would give the administration and lawmakers a tool “to respond in an effective and appropriate way.”
Under a 1962 trade law, the administration has the authority to assess the domestic production needed for projected national defense requirements, the domestic industry’s capacity to meet those requirements and the “close relation of national economic welfare to U.S. national security.” The provision, known as Section 232, has been used only 14 times, most recently by President George W. Bush in 2001 to examine the impact of iron ore and steel imports.
One analyst on Section 232 trade investigations said the administration will have a tough time making its case based on the need for domestic steel for national security purposes. Jeff Bialos, a partner at Eversheds Sutherland in Washington who served in top posts at the Pentagon and Commerce Department in the Clinton administration, said the 2001 case on steel imports found that the Defense Department’s demand for steel for weapons systems was less than the 0.3 percent of the domestic steel industry’s total annual output.
“Whether or not there’s a steel import problem, it’s going to be very difficult to make this into a national security problem,” Mr. Bialos said. “It’s hard to see how the standard [threatening national security] would be met for an affirmative finding.”
Recent reports by the U.S. International Trade Commission have found that the domestic steel industry is injured by imports, including harm from nations that export steel to the U.S. and unfairly subsidize those products or sell them at artificially low prices.
Mr. Trump signed an executive memorandum in the Oval Office on Thursday morning to formally initiate the investigation. By law, the Commerce Department investigation must be concluded and report submitted within 270 days. Mr. Ross said he expects the report to be completed much sooner.
Alliance for American Manufacturing President Scott Paul said the Section 232 trade action will “safeguard our domestic steel industry’s ability to protect our national security.”
“China’s overcapacity in a variety of industrial sectors, coupled with its persistent unfair trade practices, put American jobs and industry at risk,” Mr. Paul said in a statement. “That’s what makes this Section 232 investigation so important: It’s an underutilized tool that should be deployed in defense of the domestic steel industry and its workers.”
The Commerce Department has imposed 152 penalties for steel dumping in its history, with 25 more cases pending. Mr. Ross said those cases have lacked an overall impact and that too many loopholes allow violators to continue evading trade laws.
“The problem with those countervailing duty and anti-dumping cases is that they’re very limited in nature, to a very, very specific product from one specific country,” Mr. Ross said. “It doesn’t solve the whole problem. So we’re groping here to see whether the facts warrant a more comprehensive solution to deal with a wide range of steel products from a wide range of countries.”