Aerial view of huge AK Steel operations in Middletown

AK Steel wants electrical steel tariff loophole fixed

Portman said action is needed to address the worldwide overcapacity of steel, but the United States should take a more targeted approach.

“We should focus on countries that distort markets and repeatedly violate trade laws, and on the steel and aluminum products that are most at risk from a national security perspective,” Portman said.

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He said he is concerned that broad-based tariffs will have unintended consequences for downstream steel and aluminum users and will unnecessarily invite retaliation in the form of tariffs against U.S. exports.

AK Steel, the last electrical steel manufacturer in the United States, is Butler County’s third-largest employer with a total of approximately 2,400 full-time employees at its Middletown Works and corporate headquarters in West Chester Twp.

“AK Steel is the only producer in all of North America of grain-oriented electrical steel — or GOES — a product that our electrical grid depends on,” company spokeswoman Lisa Jester told this news outlet. “Yet, last year, imports of this steel were up 98 percent. In fact, imports of GOES from China increased nearly 2,000 percent in 2017 versus 2015.”

President Trump announced March 1 he would levy penalties of 25 percent on steel and 10 percent on aluminum imports. He had been weighing protective trade action under a rarely used “Section 232” of the U.S. trade law, which allows for restrictions on imports to protect national security.

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Jester said that the 232 remedy does not apply to GOES that is merely cut or shaped.

“As such, we know that bad actors will exploit this loophole by setting up facilities in Canada and Mexico in order to bring in foreign dumped GOES from offshore — because there is no GOES production in Canada or Mexico — make those minor modifications, then send it into the U.S. where it would now not be subject to the tariff,” she said. “If the Administration doesn’t take additional actions necessary to stop this type of cheating, we will run the risk of losing all of the manufacturing that supplies our nation’s electric grid.”

That would make the United States dependent on foreign producers from places like China to help it repair and restore its electrical grid in the event of a national disaster — meaning it could take months before power was restored, Jester said.

The company employs 1,4000 people at its Butler Works operations in Butler, Pa., which includes a GOES production line. It employs 130 at its Zanesville location, which includes a finishing line.

Portman said without relief, AK Steel has told him it will have shut down GOES production.

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“Yet as currently constructed, AK Steel is unlikely to fully benefit from the remedy proposed by the president,” he said. “I’ve urged him to reconsider this issue and make electrical steel a priority so AK Steel can fully benefit from this remedy and we can protect these jobs.”

“A more focused and balanced approach will provide relief to the products most at risk, like electrical steel, while minimizing the potential harm to downstream steel and aluminum users,” Portman said.

The White House didn’t immediately respond to this news outlet’s request for comment.

Portman said he is pleased that administration officials have indicated that there may be some exemptions from this policy, including for Canada and Mexico while an updated NAFTA is negotiated. In addition, he continues to believe that the United States must do more to use the tools it have available to it to protect American jobs.

Portman — along with Senators Sherrod Brown (D-OH) and Bob Casey (D-PA) — previously urged President Trump to prioritize electrical steel in any section 232 trade remedy.

Jester said AK Steel is “very appreciative” of the work Ohio Senators Portman and Brown are doing to bring the matter to the administration’s attention and try to get it fixed.

Staff writer Anthony Shoemaker contributed to this report.

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