US to investigate steel, Al tariff profiteering

The US Commerce Department will launch an investigation into unfair profiteering from the steel and aluminum tariffs as US domestic prices rise beyond what the department believes is justified.

The department today also will also announce its first round of product-based tariff exclusions.

Commerce secretary Wilbur Ross suggested in testimony before the senate finance committee today that steel and aluminum prices have gone up "far more than warranted by the tariffs" as a result of speculative activity by "various intermediary parties" who are hoarding material. Ross did not elaborate on who the department will target in its investigation.

Steel and aluminum prices in the US have posted broad increases in 2018 amid strong end-user demand and disruptions in import supply. Offers for hot-rolled coil (HRC), a steel sheet product used in cars and appliances, have risen by more than 50pc through June from a year earlier to more than $900/st, near a 10-year high. Foreign rebar suppliers are increasingly booking sales to the US as rising domestic prices boost the competitiveness of tariff-inclusive import offers.

Ross said that it "should be fairly quick" for steel prices to decline as more US supply comes online, citing 2.5mn short tons of additional domestic flat-rolled steel production capacity resulting from the restart of two blast furnaces at US Steel's plant in Granite City, Illinois.

But senators of both parties pressed Ross on the impact of rising prices on US manufacturers who consume steel and aluminum.

Small businesses are "paying the price of the president's negotiating strategy," senator Pat Roberts (R-Kansas) said.

Senators also expressed frustration with the department's delay in acting on product-based tariff exclusion requests.

Commerce today plans to announce its first 42 steel and aluminum product-based tariff exclusions, Ross said, a small fraction of the total 22,506 exclusion requests received by the department since the process was opened in late-March.

Commerce received 20,003 exclusion requests for steel products from US companies, with 2,513 rejected and the remainder still outstanding. More than 3,700 objections to these exclusion requests have been filed by US producers.

The department rejected 420 of the more than 2,500 aluminum product exclusion requests it received from US companies, with over 2,000 requests still outstanding. A total of 93 objections to these requests have been filed.

Regarding country-wide exclusions from the tariff, Ross told the committee that negotiations for exemptions for Canada and Mexico may come back into play as North American Free Trade Agreement (Nafta) talks pick back up in July.

The US imposed a 25pc tariff on steel imports and a 10pc tariff on aluminum imports effective 23 March. Temporary exemptions granted to Canada, Mexico and the EU expired on 1 June after negotiations failed to yield permanent exclusions for these countries. Australia, Argentina, Brazil and South Korea were granted permanent exemptions after agreeing to import quotas.