WASHINGTON — Domestic automakers and suppliers are bracing for a possible Trump administration decision to impose steep tariffs on imported steel and aluminum predicated on national-security reasons, leading to higher costs and lost sales to foreign competitors.
Automakers are concerned about the unintended consequences of any restrictions on steel, including a potential decline in domestic auto production and the risk of triggering a global trade war. Retaliation by other countries would make access to raw materials and export markets even more difficult.
"Uncertainty is what's problematic for the industry, and the most likely outcome for any remedy proposed is higher prices," said Kristin Dziczek, director of industry, labor and economics at the Center for Automotive Research.
While most automotive steel is sourced from mills in the U.S., many specialty grades come from overseas.
President Donald Trump on April 20 ordered the Commerce Department to investigate the effects of global overcapacity in steel and aluminum, dumping, illegal subsidies and other factors on U.S. economic security and military preparedness. Steel and specialty alloys are heavily used for armor, vehicles, ships, aircraft and infrastructure.
Cheap steel and aluminum have flooded the global market in recent years, leading to artificially low prices, a problem the White House and many experts blame on China propping up too many state-owned steel producers. Low profits prevent U.S. steel and aluminum producers from investing in development of higher-grade metals and from retaining a skilled work force, they say.
Eight U.S.-based smelters have either closed or curbed production since 2015, the Commerce Department says.
The U.S. is the world's largest steel importer, buying 30.1 million metric tons of steel in 2016, almost a fifth of all steel imported globally, according to the U.S. International Trade Administration. The top import sources are Canada, Brazil and South Korea.
The U.S. doesn't have steel tariffs, but punitive duties already are in effect in 113 cases in which companies dumped steel at prices below fair-market value or illegally received state subsidies, with 13 more cases currently pending.