With recent news of an imposed tariff on imported steel and aluminum, the construction industry may be significantly impacted by this tax. In the first section of this six-part article, we focused on the key details pertaining to this tariff. In the second section, we gave a brief overview of the history of steel manufacturing in the United States. In this section, we will explain the main reasons why this tariff was imposed.
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Trade “Dumping” and Tariffs
As we discussed in the last section, many American steel companies believe that production drastically decreased in the United States because of other countries, like China, violating trade rules and producing materials at an extremely low cost. Naturally, this has sent global prices for materials like steel to be set at such a low price that the United States cannot compete. This flooding of the trade market is referred to as “dumping.” As the largest importer of steel in the world, the United States placing a tariff on steel and aluminum safeguards steel produced domestically along with Canada and Mexico as part of the 1994 North American Free Trade Agreement (NAFTA).
National Security Issue
With a flooded global trade market and dwindling domestic steel production, the recent tariff was allegedly imposed as a national security concern by the executive branch. Under Section 232 of the Trade Expansion Act of 1962, the law protects certain “domestic production needed for projected national defense requirements.” However, creating an import tax on many global importers could come at a price and cause retaliatory tactics.
Global Reaction to the Tariff
With only Canada and Mexico exempt under this new tariff, many of America’s closest allies and trading parties will be excluded from this nontaxable supplying process. From South Korea to Brazil to the European Union, many global leaders and top importers of goods and materials into the United States are voicing their disapproval. As we will discuss in the fourth, fifth, and six sections of this article, placing a tariff on imported steel could greatly impact the construction industry in a variety of ways. A tax on imports of steel and aluminum could impact everything from higher purchasing costs to higher consumer costs to fewer jobs in the construction industry.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.