Toomey Predicts Global Arrangement on Steel Could Result in 70% Tariffs
Pennsylvania Republican Sen. Pat Toomey, who chose to retire from the Senate, warned that Section 232 tariffs -- and the economic costs they impose on downstream users of steel -- are "about to get much worse," because there was no interest in passing reforms to the statute.
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"It brings me no joy to rise to say I told you so," he said in a floor speech Dec. 21. "As I warned my colleagues on both sides of the aisle years ago, this abuse of Section 232 will haunt us like a protectionist Frankenstein, unless Congress reins in executive abuse of this law."
Toomey said that under the guise of a climate club for steel and aluminum, launched through negotiations with the European Union, tariffs may go much higher than the current 25% on steel and 10% on aluminum. (European steel is currently exempt from the tariff if it is under tariff rate quota limits, designated by product and allocated quarterly).
He noted that joining the club is not only based on the carbon intensity of steel or aluminum production, but countries also will "need to demonstrate they're taking a hard line on trade remedies."
That's because the Section 232 tariffs' original rationale was that non-economic overproduction of steel was moving through global commodity markets and weakening the U.S. steel industry by undercutting the prices they could charge.
Toomey said that Biden administration officials, who retained the tariffs first imposed by Donald Trump, "will argue this is necessary to protect American jobs."
But he said there are 80 times as many workers whose jobs depend on buying steel, compared with 140,000 steel workers. He said one estimate said that the Section 232 tariffs led to 75,000 jobs lost.
Toomey said for countries in the club, their steel and aluminum could avoid tariffs entirely, or could be subject to tariffs up to 25%, depending on emissions.
"For countries outside the club who want to sell steel and aluminum, Americans will have to pay 25% to 70% in taxes on those purchases," he said.
That 70% figure had not previously been publicized, though reports of a draft proposal from the U.S. said that imports from countries outside the arrangement would face higher tariffs.
"They would use the threat of ultra high tariffs on the steel and aluminum from other countries as a way to coerce them into implementing the administration's preferred climate policies," he said. "And even though they won't admit it yet, they're using 232 to justify this."
Toomey said Congress could still pass a law that would say that before such tariffs could go into effect, Congress would have to approve them.
He asked rhetorically: "What's wrong with that?"