WASHINGTON -- A bipartisan group of U.S. senators wants the Biden administration to address a rise in steel imports from Mexico that they contend threatens domestic steel production.
The 13 senators sent a letter last Tuesday to Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai regarding the "unsustainable surge" in these imports. Republican Sens. Tom Cotton of Little Rock and John Boozman of Rogers signed the letter with a group that included fellow conservatives like Marco Rubio of Florida and Democrats such as Massachusetts' Elizabeth Warren.
"Many steel producers are concerned that additional production cuts, layoffs, and plant closures are imminent," the coalition said regarding the increase in imports. "The administration must act now to avoid further damage."
Senators tied the rise in imports to a May 2019 decision ending tariffs on steel and aluminum products from Mexico and Canada. The countries reached an understanding while finalizing the United States-Mexico-Canada Agreement -- a deal replacing the North American Free Trade Agreement -- that called for the United States to end duties with Mexico and Canada eliminating reactionary policies.
As part of the May 2019 decision, the United States and Mexico agreed to monitor steel trade between the countries with the option of imposing tariffs in cases involving import levels that "surge meaningfully beyond historic volumes" of products.
The United States has recorded an increase in steel imports from Mexico since signing the compact between the two countries; according to the federal International Trade Administration, the United States imported 4.8 million metric tons of steel from Mexico last year compared with 3 million metric tons in 2020.
"Since the U.S. lifted Section 232 tariffs, Mexican steel conduit imports have reached unprecedented levels and Mexico's penetration of the U.S. steel conduit market has more than tripled, while demand from U.S. consumers has fallen," the senators said, noting a misclassification of Mexican steel conduits hid the effects of the trading surge.
Cotton and Boozman's involvement is related to the presence of steel in Arkansas' economic portfolio. Companies such as Nucor Corp. and United States Steel Corp. have established operations in Arkansas. According to the Arkansas Economic Development Commission, the state exported more than $683 million worth of metal goods in 2019.
The Arkansas District Export Council, a body focused on the consequences of international trade in Arkansas, applauded the letter. The U.S. secretary of commerce appoints members to the Arkansas organization and 58 similar groups throughout the United States.
"As we kind of have moved into looking to make Arkansas more than just a land for agriculture and trucking as a showcase state, we have taken on a lot in the fields of technology, and that's something that gets underutilized and not looked at enough here," Max Avery, the council's vice chairman, told the Arkansas Democrat-Gazette on Monday. "I think steel is one of the highlights that we have to start focusing on."
There is a concentration of steel-related companies in eastern Arkansas, but Avery stated steel's influence has become statewide.
"We have seen a lot of growth along this [Interstate 40] corridor, and I think it makes sense from a logistics standpoint," he said. "Anywhere on [Interstate] 40 makes sense for companies to locate themselves."
Avery said imported products are often cheaper because of lower labor costs, and a surplus of these products hurt companies trying to sell American-made products. Arkansas District Export Council Chairman Jonathan Bricker told the Arkansas Democrat-Gazette in an email that a rise in imported steel negatively affects domestic manufacturers, distributors and suppliers still readjusting from the coronavirus pandemic.
"While we know Arkansas and Mexico have a wonderful working relationship in trade, we do need to be aware of such an increase in imported steel from Mexico," he said.
"Covid-19 had a negative effect on our manufacturing jobs here in the state, [and] we don't need internal challenges hindering our positive growth."
In closing their letter, the senators called on the Biden administration to reevaluate the current relationship with Mexico and return import levels to "historic volumes of trade" with possible quotas.
"However, if the Mexican government refuses to remedy this breach, we regretfully urge the administration to consider other mechanisms to ensure compliance and protect American jobs, including the reapplication of Section 232 tariffs," the legislators added.
Rep. Rick Crawford -- whose 1st Congressional District runs along the Mississippi River and serves as the home to various steel operations -- said the United States has a responsibility to "lay down the hammer on bad actors" and address this rise in imports.
"Our nation has been able to help level the playing field for the American steel industry while giving flexibility to countries that have proven to be allies because of the implementation of modified section 232 tariffs on steel imports," Crawford told the Arkansas Democrat-Gazette in a statement.
"Unfortunately, Mexico has taken advantage of our agreement to lift a portion of the tariffs on steel products and Mexican steel imports have reached extraordinary levels."