The American steel industry directly and indirectly supports more than 2 million American jobs. Illinois is home to a number of steel-making companies, as well as firms that supply the steel industry and companies that benefit from the respending of income earned by the industry and its suppliers.
Accounting for all these economic interests, the economic engine of iron and steel is responsible for nearly 126,000 jobs in Illinois, paying more than $9 billion in wages and salaries annually, while generating more than $32 billion in industry output and nearly $4 billion in federal, state and local taxes. To break it down further, the steel industry directly employs more than 25,000 people making an average of $88,871 per year, while generating nearly $12 billion to the Illinois economy.
The steel industry has developed innovative materials and manufacturing technologies that have led to the introduction of new advances in high-strength steel grades for cars and trucks, sustainable building construction, and energy transmission and development, among others. Each year, more steel is recycled than paper, plastic, aluminum and glass combined. And the steel industry is critical to our national and economic security. Every military platform and weapon system is dependent on American-produced steel.
However, the leadership and innovations of the industry are at risk due to high levels of unfairly traded imports. In 2015 and 2016, American steelmakers were forced to lay off more than 18,000 workers. While more than 7,000 jobs have returned through December 2018, payrolls were still more than 11,000 below their December 2014 levels. The steel industry has not seen the same post-recession growth that has benefited the rest of the manufacturing sector.
In response to this steel crisis, the president last year determined under Section 232 of the Trade Expansion Act that imports of steel products threatened to impair our national security. He imposed a 25 percent tariff on steel imports.
This necessary action has allowed the American steel industry to begin to recover. Capacity utilization at existing mills has increased in recent months to more than 80 percent — levels not seen in more than 10 years. Steel shipments were 5 percent higher in 2018 than 2017. Steel imports have decreased 35 percent since the steel tariffs took effect in April 2018 through February 2019. The share of the steel market taken by imports has fallen from 29 percent last April to 20 percent in February.
The Section 232 trade remedy has also enabled investments in facilities — one of the most significant of which is the restart of U.S. Steel’s operations at Granite City Works and the hiring back of 800 workers there.
While conditions in the American steel industry have improved recently due to the administration’s trade actions and tax and regulatory reform policies, there is still more work to be done.
There are nearly 500 million net tons of excess steel capacity in the world today, much of it in China. In fact, China’s level of steel production hit a new record high last year, exceeding one billion net tons in 2018 — more than 10 times all of the American steel production. And the size of China’s steel industry has increased dramatically since 2000, largely as a result of government subsidies — growing from 165 million net tons of capacity in 2000 to nearly 1.2 billion net tons in 2017.
By comparison, America’s steel production capacity was 122 million net tons in 2018, and steel consumption was 112 million net tons in 2018. This unbalanced situation, along with China’s high level of steel exports, continues to destabilize the global industry and threaten American steelmakers. If the Section 232 tariffs were prematurely removed, this excess production could easily flood into the United States, injuring the steel industry once again.
It is clear that the Section 232 trade remedy is critical to ensuring the steel industry remains a critical asset for our national and economic security, and vital in developing the most advanced steel products. The American steel industry built this country. We want to keep American steel strong.
Thomas J. Gibson is president and CEO of the American Iron and Steel Institute in Washington, D.C.