What Is MSCI’s Position On Section 232 Tariffs, And What’s The Latest On Their Impact?

PLEASE NOTE: MSCI is reporting the following data for its members’ information only. As Connecting the Dots has reminded readers before, MSCI consistently has argued that global overcapacity and other unfair trading practices, particularly by China, have harmed the U.S. steel and aluminum markets. To address this circumvention, in 2017 MSCI advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy.

Click here to review all of MSCI’s advocacy on Section 232 tariffs.

Today, three years after the implementation of these tariffs, the debate about them continues to spark significant interest. MSCI President and CEO M. Robert Weidner, III recently weighed in on the debate, and on supply chain disruptions, in an interview with The Fabricator.

Weidner said, “From our perspective, I can tell you that we testified on the 232s about excess Chinese steel capacity in front of U.S. Trade Representative, and we testified on excess Chinese aluminum capacity in front of the International Trade Commission. We supported the tariffs on what I call upstream—the producers. Also, keep in mind that 30% of the members of MSCI are mills, so we supported the tariffs. But we went one step further than my colleagues on the producing side. We said that the government also should have looked at imposing a 20% tariff on the fabricated metal parts. We need both a healthy source of domestic supply as well as a healthy source of domestic demand.”

Read the full interview here.

Additionally, two weeks ago, the Economic Policy Institute and the American Primary Aluminum Association released a study that the organizations said indicates the Section 232 tariffs on aluminum imports “have allowed U.S. aluminum output and employment to rebound.” Specifically, the report, which is available here, contended:

• As a result of the penalties, new and expanded facilities will employ nearly 4,500 additional workers, generate $6 billion in new investments, and add nearly one million metric tons of annual rolling and extrusion capacity to the downstream domestic aluminum industry.
• In the two years from the March 2018 implementation of the Section 232 aluminum import measures to the February 2020 pre-COVID-19 economic peak, U.S. production of primary aluminum increased by 37.6 percent compared with the preceding two-year period.
• S. and Canadian shipments of semi-finished products also rebounded. Shipments of all extruded products increased 2.7 percent and total sheet and plate shipments increased seven percent relative to the preceding two-year period.
• Since implementing the Section 232 import measures, U.S. employment in primary and downstream aluminum industries increased by 1,200 on net by February 2020, at the start of the COVID-19 crisis.

According to Aluminum Association data, meanwhile, U.S. jobs in primary aluminum and alumina refining (about three percent of total industry jobs) have grown since tariffs were implemented in 2018 but jobs in all other segments have declined.

While industry organizations have continued to release data, as The Hill has reported, President Joe Biden and his administration continue to review whether or not to keep the penalties in place and to hear from stakeholders on both sides of the issue. Indeed, two weeks ago, seven major steel trade groups and labor unions urged the president to keep the penalties. Read more here.