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Editorial: U.S. steel import restrictions do nothing but harm

  • February 20, 2018
  • , Nikkei , p. 2
  • JMH Translation

The U.S. Department of Commerce has argued that increases in U.S.-bound steel and aluminum products are threatening national security and presented to President Donald Trump specific recommendations to curb imports. 

 

If the president decides to invoke measures to curb imports, they would have a serious adverse impact on the rule-based global trade order. Japan and Europe should step up efforts to ensure the U.S. will not take this step.

 

The Department of Commerce is making these recommendations based on Section 232 of the Trade Expansion Act of 1962, which allows the government to restrict imports of products that could threaten to impair national security.

 

On steel, the Department of Commerce recommended three alternatives: (1) imposing at least a 24% additional tariff on all countries; (2) imposing at least a 53% tariff on 12 countries, including China, and setting quotas that are equivalent to actual imports made in 2017 from these nations; (3) setting import quotas equal to 63% of imports from all countries in 2017. The president will make a decision by mid-April.

 

These import restriction measures are problematic in three aspects. One is that they may largely affect the global trade order that is based on free trade.

 

The World Trade Organization allows countries to impose import restrictions if their national security is at stake, but the situations it anticipates are exceptional cases, such as an imminent conflict. If the U.S. introduces import restrictions while not facing a national security situation that justifies the use of import restrictions, other countries may also take advantage of the practice of curbing imports by citing national security as the reason.  Some countries may resort to taking retaliatory steps, such as imposing a higher tariff, to deal with the U.S.’s unilateral action.

 

Secondly, the import restrictions will not offer an intrinsic solution to the problem. On steel, issues such as China’s overcapacity have been pinpointed as problems that need to be addressed, and ministerial meetings are being held to discuss measures. This is a mechanism that Japan, the U.S. and Europe are using to press relevant countries not to distort competition through national subsidies and other measures. China is also being pressed to take steps.

 

If the U.S. disregards this mechanism and takes dogmatic action, China and other countries will undoubtedly dodge the brunt of criticism by saying “the U.S. is causing a problem.” This may disrupt the U.S. unity with Japan and Europe.

 

The third point is that restricting imports may backfire for the U.S. The U.S. administration has already imposed anti-dumping duties on many U.S.-bound steel products. This is already sending steel prices higher. If steel imports are restricted on top of this, automakers, which use steel products, and consumers will be severely hurt. 

 

Unilaterally imposing import restrictions will do no good for the U.S. or the rest of the world.

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