Tariff Impacts on Structural Steel Markets
The Section 232 tariff began as a recommendation from the Department of Commerce at the conclusion of a nine-month investigation into the effects of imported steel on national security. Based on its findings, Commerce recommended a 24% tariff on a wide range of steel products that would affect many industries, not just construction. On March 1, 2018, the President announced his intention to impose a 25% tariff, and then issued an Executive Order which implemented these tariffs on March 23, 2018.
As for the precise impact of a tariff on steel projects, the answer is that it will depend. However, a 25% tariff on imported steel mill material does not equate to 25% increase in the overall cost of a project. The cost of material is just one of several components in the cost of a steel structure. Of course, AISC is never involved in individual pricing decisions, and has no control over marketplace pricing. Engineers and contractors with specific pricing questions should contact an AISC Member Fabricator to discuss individual projects.
The cost of steel construction is responsive to market forces, and the structural steel industry operates in a competitive environment. AISC has long believed that the best way to increase the utilization of domestic steel is to increase the size of the market, and has advocated for market-building activities that keep structural steel as the material of choice for America's great buildings, bridges, and infrastructure projects.
Section 232 tariffs were put in place on March 23, 2018, to protect national security interests related to the American steel industry because steel is integral to critical infrastructure, such as bridges and power plants.
On Friday, May 17, 2019, the United States announced an agreement with Canada and Mexico to remove Section 232 tariffs for steel and aluminum imports from those countries and in return, Canada and Mexico will remove all retaliatory tariffs they've imposed on American steel and aluminum. This rollback of Section 232 tariffs went into effect on Monday, May 20.
What could happen next
The agreement provides for aggressive monitoring and a mechanism to prevent surges in imports of steel and aluminum. The U.S. may re-impose Section 232 tariffs if there is a surge of steel and aluminum imports. Any retaliatory action by Canada and Mexico in response to the re-imposition of Section 232 tariffs would be limited to steel and aluminum products.
The big picture
There is still a 25% tariff on steel mill material coming into the U.S. However, it’s important to recognize that when you consider the complete exemption for Australia, Canada, and Mexico, quotas for Argentina, Brazil, and South Korea, and all of the product exclusions granted by the Department of Commerce, only 30% of imports are covered by these 232 tariffs on the following steel products:
- Long products such as bars, rails, rods, and structural shapes
- Pipe and tube products that either seamless or welded
- Flat products like sheets, strips, and plates
- Concrete reinforcing bar (rebar)
Also remember that these tariffs don't apply to imports of fabricated structural steel. While Section 232 tariffs have been effective at curbing imports of mill material, foreign countries have found other ways to bring that steel into the United States, specifically in the form of fabricated steel assemblies. Ultimately, by leaving fabricated structural steel off of the tariff list, the Administration created a loophole allowing foreign fabricators to buy tariff-free steel, fabricate it, and ship it into the United States without penalty, circumventing the U.S. trade policy that was put in place to strengthen the steel industry, not weaken it.
Section 301 tariffs do, however, apply to fabricated structural steel imported from China. All of the discussions about Chinese tariffs you see in the media refer to Section 301 tariffs, not Section 232 tariffs.
Section 301 tariffs remain unchanged as of today. Fabricated structural steel imported from China is still subject to a 25% tariff upon import to the U.S.
The U.S. imposed Section 301 tariffs on a broad array of Chinese products, including fabricated structural steel, in response to an unfair Chinese trade policy that forces foreign companies to disclose intellectual property to access the Chinese market. Chinese fabricated structural steel has been subject to a 25% tariff since August 23, 2018. This is the first time that the parts of the Section 301 tariff list that are relevant to our industry have extended beyond raw steel mill products.
It's important to remember that fabricated structural steel is just a minute portion of the overall scope of Section 301 tariffs.
How we got here
Last summer, two AISC board members testified before the U.S. Trade Representative Section 301 Committee in Washington, D.C., on behalf of the fabricated structural steel industry. Jeffrey Sterner, president and chief operating officer of High Industries in Lancaster, Pa. (an AISC member and certified fabricator and erector), and David Zalesne, chairman of AISC and president of Owen Steel Company in Columbia, S.C. (an AISC member and certified fabricator) supported applying 25% duties under Section 301 of the Trade Act.
In a statement, AISC President Charles J. Carter, SE, PE, PhD, said "On behalf of AISC and the American structural steel industry, we appreciate USTR's willingness to listen, and commend the USTR for including fabricated steel tariff codes on the current list for action under Section 301. This is a very positive step toward protecting downstream users that have been left exposed to foreign fabricators circumventing current 232 trade actions."
Additional information about Section 301 tariffs can be found below:
Questions related to tariffs should be directed to Brian Raff, Director of Communications and Public Affairs, at firstname.lastname@example.org.