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Steel News September 15, 2017 05:30:28 AM

Implications of Iron and Steel Import Reductions

Paul Ploumis
ScrapMonster Author
The purpose of these measures was to impose a temporary safeguard to assist America’s steel industry and its workers to make a positive adjustment to import competition with respect to certain steel products.

Implications of Iron and Steel Import Reductions

SEATTLE (Scrap Monster): Prior to imposing trade restrictions on imported iron and steel products, it is necessary to first consider the potential negative impacts on the Marine Transportation System and the national economy.

The 34.4 million tons of imported non-containerized iron and steel products have a significant impact on the nation’s marine transportation system, and further on key domestic industries using the imported iron and steel products.

In addition to the economic impacts generated by the imported steel, it is important to emphasize that the majority of the ocean vessels carrying imported steel into the Gulf Coast ports such as New Orleans, as well as the Great Lakes ports, provide the backhaul vessel capacity to move export grain from the U.S. to overseas destinations. If import restrictions are imposed on the imported iron and steel products, not only will the 1.3 million jobs be at risk, but the ocean cost to export grain from the U.S., particularly from the Lower Mississippi River, will increase due to the restricted number of vessels that will be available to carry grain exports (due to the restricted steel import volumes). This in turn will have a ripple effect into the nation’s agricultural sector.

In 2016, according to USA Trade OnLine, about 47 million tons of grain were exported via the Lower Mississippi River. Using the Martin Associates grain export model, this export grain generated 10,830 direct, induced and indirect jobs and supported about 39,000 jobs in the nation’s agricultural industry. With the imposition of import restrictions on iron and steel products, these jobs in the U.S. agricultural sector are also at risk due to increased ocean costs resulting from a restricted supply of ocean vessels that could occur under trade restrictions imposed on iron and steel products.

The models developed in this study will provide an updated framework to estimate the economic impacts that could occur should trade restriction be imposed on imported iron and steel products.

A similar analysis was conducted by Martin Associates in 2006 to assess the impacts of the Section 201 imported iron and steel restrictions. On March 5, 2002, a select group of imported iron and steel products were subject to import restrictions under Section 201 of the Trade Act of 1974. The purpose of these measures was to impose a temporary safeguard to assist America’s steel industry and its workers to make a positive adjustment to import competition with respect to certain steel products. While the initial period of coverage extended from March 2002 to March 2005, the measures were removed at the end of 2003. During this period, March 2002 through December 2003, steel imports were reduced significantly, with implications on the economic health of the nation’s Marine Transportation System. Based on the statistical analysis conducted by Martin Associates, in each month that the restrictions were in effect, 424,000 tons per month of imported iron and steel products were lost from the nation’s marine transportation system. Over the 22 months that the restrictions were in force, a total of 9.3 million tons of steel products were excluded from moving via the U.S. port system. This loss of imported iron and steel products in turn had an impact on the economic health of the nation’s Marine Transportation System, and the overall economy. Based on the previous analysis conducted by Martin Associates in 2006, the imposition of the Section 201 steel restrictions cost the economy 22 million person hours over the 22-month period, $77.3 million of federal taxes and $391 million in personal income and consumption expenditures.

In summary, such trade restrictions on imported iron and steel products will put at risk nearly 84,000 direct, induced and indirect jobs that are now generated by the handling and transport of the imported iron and steel products, and further potentially impact more than 1.2 million jobs with users of the imported iron and steel products.

 

Courtesy: AIIS

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