President Joe Biden in recent days has taken a harsh stance on foreign steel manufacturers in a bid to strengthen domestic industry, but his own environmental policies could be the true threat to American steel, experts told the Daily Caller News Foundation.
Biden promised recently to block the acquisition of U.S. Steel by the Japanese Nippon Steel Corporation to ensure that the company remains under American control and also called for tariffs on Chinese steel to be tripled from 7.5% to protect domestic industry. The president’s recent proposals won’t have a large effect on bolstering the steel industry, but environmental policies from the administration pushing for “green steel” could severely harm its competitiveness, according to experts who spoke to the DCNF. (RELATED: Biden Admin Signals Support For Embattled High-Speed Rail Project. Critics Say It’s A ‘Boondoggle’)
“Unfortunately, Biden’s proposed tariffs don’t solve the problem of the US steel industry’s uncompetitiveness to nations other than China,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF. “Our inability to compete has been driven mostly by excessive regulation, especially ‘green’ ones pushed by this administration and their lackeys. The best thing this administration could do if they actually wanted to help American steel workers would be to roll back the onerous regulations that have made it impossible for those workers to compete on the world stage.”
The Environmental Protection Agency (EPA) announced in March the final amendments to a new rule that sets national emission standards for air pollutants that are the result of iron and steel manufacturing. A bipartisan group of eight senators sent a letter in December to the head of the EPA opposing this regulation and two other proposed environmental restrictions on the steel industry, arguing that they would not meaningfully reduce emissions and would push companies overseas.
“We have serious concerns with these proposed rules because they would dramatically undermine the domestic steel industry and national security while driving production overseas likely resulting in no net reduction in emissions from the steel industry globally,” the senators wrote in the letter. “American steel manufacturers take seriously their commitment to protecting the environment; however, rules that drive production overseas are bad for our economy, bad for national security, and bad for the environment.”
In February 2022, the Biden administration announced a number of new actions to bolster “low-carbon production” of steel and aluminum that could be used to fuel other green products like electric vehicles, wind turbines and solar panels. The president has also initiated negotiations with the European Union to create trade standards based on emissions in the production of steel and aluminum.
The arrangement with the EU would restrict U.S. access to higher-emission steel and would limit American companies’ ability to export higher-emission steel. The Trump administration put in place 25% steel and 10% aluminum tariffs on the European Union in March 2018 in a bid to protect domestic production, which Biden removed in October 2021, according to the New York Times.
The president also recently announced $1.5 billion in subsidies for six projects exclusively for producing clean iron and steel, which costs more to produce.
Regulations, experts argue, do more to hamstring the American steel industry than foreign competition.
Less than 2% of steel imported into the U.S. in the last year as of April 1 has been from China, making it the ninth biggest source of steel for the country, according to data from the Department of Commerce. Over half of all steel imported into the U.S. comes from either Canada, Brazil or Mexico.
“I don’t think the Biden administration’s steel tariff announcement will have much of an economic impact,” Clark Packard, research fellow in the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute, told the DCNF. “The reason is actually pretty simple: since 2014, the United States has levied a series of tariffs on Chinese steel — antidumping/countervailing duties (trade remedies), the Section 232 ‘national security’ tariffs and then the Section 301 tariffs — and as a result, very little Chinese steel enters the U.S. to begin with.”
However, the United Steel Workers union has come out in favor of Biden’s recent tariff plan, calling it “worker-centered.” Biden and former President Donald Trump have both vied to gain the support of union workers, with the president pledging the night before the 2020 election to be the “most pro-union president you’ve ever seen.”
“This is all about electoral politics and the 2024 presidential campaign,” Packard told the DCNF. “The Biden camp did this to help blunt the inevitable criticism from the Trump campaign that they’re globalists.”
The Biden administration argues that since China accounts for nearly 50% of global steel production and its prices are 40% lower than those of American firms, depressed global prices from Chinese sources will harm American manufacturers. China, in the midst of its current economic woes, has resorted to pumping out cheap exports to fuel its economy, with the administration arguing that tariffs would level the playing field.
“China’s policy-driven overcapacity poses a serious risk to the future of the American steel and aluminum industry,” Lael Brainard, director of the National Economic Council, told reporters in April. “China cannot export its way to recovery. China is simply too big to play by its own rules. In manufacturing sectors like steel, China is already producing more than China or the world can easily absorb. China’s subsidies and other forms of support lead to exports flooding global markets at artificially low prices, undercutting American steel that is cleaner.”
President Biden knows that steel fueled our country’s industrialization and helped build the middle class – which is why he will continue to stand by America’s steelworkers. pic.twitter.com/GgnCQ2jMK5
— The White House (@WhiteHouse) April 17, 2024
“Blocking Nippon’s acquisition of U.S. Steel is really misguided,” Packard told the DCNF. “Japan is not a national security threat to the United States, and Nippon is a private firm, not an adjunct of the Japanese government. The U.S. provides a security guarantee to Japan — we’re willing to use nuclear weapons to defend Japan if necessary, but a private Japanese steel company can’t acquire an American steel company?”
The proposed acquisition has faced scrutiny from both the left and the right, with a group of Republican senators immediately following the announcement of the deal sending a letter to Treasury Secretary Janet Yellen saying Nippon Steel’s “allegiance lies to a foreign state.”
“You ultimately have a problem where Nippon Steel, itself a recipient of massive industrial subsidies and support from the Japanese government, has no concern for the interests of American workers, or for that matter, the well being of America,” Oren Cass, executive director of American Compass, told The American Conservative in December. “To pretend that there’s no relationship between who owns and controls and makes decisions about our most vital industrial assets and what the outcome for those assets is going to be is just bizarrely naive.”
Nippon Steel argues that U.S. Steel will remain primarily an American company, with its headquarters remaining in Pittsburgh, Pennsylvania, and its products mined and melted in the U.S. Through the deal, Nippon Steel is offering at least $1.4 billion in investment to American steel production.
Trump has signaled that if elected again in 2024, he will put in place sweeping tariffs on all foreign goods, hinting that it could be around 10%. The former president has indicated that he would use the proceeds of the tariffs to lower domestic costs for businesses, like taxes.
Biden criticized tariffs in 2020, particularly the ones that Trump put in place on China, noting that they have hurt industries like manufacturing and agriculture, according to Forbes.
Manufacturing jobs have stayed largely stagnant since October 2022, when they rebounded from huge losses seen during the COVID-19 pandemic, according to the Federal Reserve Bank of St. Louis. The number of Americans employed in manufacturing totaled 12,956,000 in March, compared to 12,930,000 in October 2022, a difference of just 26,000.
“Ironically, the only way under the current regime for the industry to still exist in the United States and employ American workers will likely be for Nippon Steel or another foreign company to buy our once-great companies,” Antoni told the DCNF. “Again, this is a function of our burdensome regulatory state. If Biden’s visions of ‘green’ energy, environmentalism, and trade were to actually be realized, there would be no American steel industry left, just like there would be no fossil fuels.”
The White House did not immediately respond to a request to comment from the DCNF.
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