Cleveland-Cliffs CEO Lourenco Goncalves discusses the company’s earnings results and provides his perspective on the steel industry on “The Claman Countdown.”
The World Trade Organization (WTO) rejected 2018 tariffs imposed by then-President Donald Trump on foreign steel and aluminum in a ruling on Friday that drew a backlash from the Biden administration.
Trump imposed the tariffs, which are taxes on imported goods, of 25 percent on steel and 10 percent on aluminum on the grounds that imports of those products threaten U.S. national security under Section 232 of the Trade Expansion Act.
By raising taxes on imported steel and aluminum, the Trump administration has tried to protection of local producers against what it saw as global overproduction—although Canada and Mexico, along with several other nations, were exempted from the tariffs.
The tariffs angered US allies, including the European Union and Japan, and led to commercial dispute at the WTO, when China, Norway, Switzerland and Turkey contested the move.
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At Majestic Steel in Ohio, flat-rolled steel is processed for distribution across the country. (Stephen Goin/Fox News)
In its ruling, the WTO said it was “not convinced” that the US was applying the tariffs “in time of war or other emergency in international relations” that would justify the tariffs on national security grounds.
The WTO decision is unlikely to have much impact in the real world. If the US appeals the decision, it will go nowhere as the WTO Appellate Body has been inactive for three years as the US has blocked the appointment of new judges.
PAYSON, UT – MARCH 22: A worker grinds a weld seam on a safe being manufactured at Liberty Safe Company on March 22, 2022 in Payson, Utah. Liberty Safe has been struggling with supply constraints and price increases for their materials used in manufacturing ((Photo by George Frey/Getty Images)/Getty Images)
The Biden administration has also struck deals with the EU, Japan and the UK that functionally eliminate tariffs and replace them with import quotas that negate taxes on amounts of imported steel and aluminum that fall below the threshold. Those trading partners removed retaliatory tariffs against the U.S. in response to the Biden administration’s changes.
Although it has taken steps to reject the tariffs, the Biden administration has opposed the WTO ruling and argued that it overstepped its authority by ruling against the tariffs based on national security concerns.
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Electric arc furnace at US Steel’s Fairfield Works. (US Steel)
“The United States strongly rejects the misrepresentation and conclusions,” said Adam Hodge, a spokesman for the Office of the U.S. Trade Representative. “The United States has taken a clear and unequivocal position for more than 70 years that matters of national security cannot be reviewed in WTO dispute settlement.”
Hodge said the WTO “does not have the authority to judge” the national security decisions of member countries. His statement concluded: “The Biden administration is committed to preserving US national security by ensuring the long-term viability of our steel and aluminum industries, and we do not intend to eliminate Section 232 obligations as a result of these disputes.”
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The United Steelworkers, a union representing 850,000 workers, released a statement opposing the WTO ruling, saying: “US actions are effective. Section 232 relief has helped spur manufacturing, investment, and job creation while keeping America safe.”
Critics of the tariffs argue that the protectionist measures make US industries less competitive. A report of the Cato Institute since last year argued that the tariffs put US steel users at a “severe disadvantage relative to their competition in Europe and elsewhere.”
The Associated Press contributed to this report.
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