The White House's tariff regime is largely meant to support US manufacturing, but snowballing import taxes could have the opposite effect by jeopardizing new steel mill construction projects, according to industry comments in an ongoing trade hearing process.
The US steel industry has been supportive of 50pc tariffs on steel imports that President Donald Trump imposed under section 232 in June because the policy has curbed imports and allowed major domestic steel companies to ship record volumes this year.
But steelmakers looking to upgrade or build new plants face higher costs for importing steel machinery and equipment, according to public comments in the US Commerce Department's investigation into the national security impacts of machinery and robotics imports that started last month. The agency said the investigation could lead to tariffs on industrial stamping and pressing machines, turning and milling machines, grinding equipment, and machine tools for cutting and welding, although it has not shared the specific products or import codes that could face import restrictions.
US steel companies, industrial equipment manufacturers and metal recyclers warned of rising costs from potential tariffs on industrial machinery in public comments released by the Commerce Department on 22 October.
Pacific Steel Group is building a reinforcing bar plant in the Mojave Desert in California that is scheduled to come online in 2027. It would be the first new steel mill in California in more than 50 years, and will use specialized electric arc furnace equipment made by Italian manufacturer Danieli.
"As there are no domestic alternatives that meet Pacific Steel's needs, the project is entirely dependent on these imports to move forward," the company said in public comments.
Pacific Steel said it supports the current 50pc steel tariffs. But the company acknowledged that import taxes have driven the cost up of building the steel mill.
"These added expenses place significant financial strain on the project and risk delaying or even jeopardizing the successful completion of an American steel plant," the company said.
Pacific Steel's comments reflect a similar sentiment shared by Arkansas steelmaker Hybar last month. Hybar has applied for permits to build a second reinforcing bar mill in Arkansas, but tariffs on steel-making equipment could make the project cost prohibitive. The company will make a final decision on whether to proceed with the project early next year, Hybar [told Argus](https://direct.argusmedia.com/newsandanalysis/article/2746740) on 28 October.
US Steel, now owned by Japanese firm Nippon Steel, also voiced concern over the industrial machinery and robotics tariff investigation. The company plans to build a new hot-strip mill at its Mon Valley Works in Pennsylvania, install a new $100mn slag recycler at its Edgar Thompson plant in that state, and spend $200mn on upgrades to its hot-strip mill in Gary, Indiana.
"US Steel will need to rely on imports given the limited production of the major equipment necessary to construct new steel mills and modernize existing facilities," the company told the Commerce Department.
Details are scarce on the exact products affected by the tariff investigation into industrial machinery and robotics, US Steel noted. The company has identified just two possible domestic manufacturers of those products: Machine Concepts and Reel Power Industrial.
