U.S. Should Punish Importers of Unfairly Traded Steel, Cliffs SaysBy
Penalties should even include jail time, says CEO Goncalves
Largest U.S. iron-ore producer comments amid Trump steel probe
Cliffs Natural Resources Inc. wants the U.S. government to widen its investigation of unfairly traded steel shipments -- from the exporters to the importers.
Last month, President Donald Trump told the Commerce Department to expedite a study on whether steel imports are a U.S. threat to national security. While China has long been considered a prime target, Cliffs Chief Executive Officer Lourenco Goncalves says the probe shouldn’t overlook the part played by domestic steel importers.
“There’s a missing portion in the entire supply chain that hasn’t been addressed yet: What about the recipients of this steel, the guys that play both sides?” Goncalves said last week by telephone. “At the same time they have a public speech supporting the trade cases and saying all the right things, under the radar and behind everybody’s back they are buying a lot of deducted steel and asking the middle man to bring more.”
Goncalves, 59, said the government should even consider levying jail time, depending on the level of the threat to national security.
In 2016, a gauge of the steel and iron-ore industry in the Americas had its best year since 2003 due in large part to a spate of successful trade cases slapping duties on foreign imports, including from China. While global steel prices have improved in the past year, some American steel producers, including No. 2 U.S. Steel Corp., continue to struggle. Last week, U.S. Steel posted earnings that missed analysts’ estimates, citing “operating challenges” that blunted the effect of higher prices.
Cliffs, the largest U.S. iron-ore producer, which makes it heavily dependent on the health of domestic steelmakers, also reported disappointing earnings last week. Its shares dropped to the lowest in five months on Thursday after the Cleveland-based company reported a first-quarter loss and cut its outlook for 2017.
Trump campaigned heavily on the commitment to revitalize struggling U.S. industries like steel and aluminum. Questions about the future of the American steel industry have since become a hot political topic, with Trump signing a “Buy American” order to buoy American steel producers by forcing projects such as U.S. pipelines to use steel made in the country.
In mid-April, Commerce Secretary Wilbur Ross began a probe investigating whether steel imports are “in such quantities or under such circumstances as to threaten to impair the national security.” Trump declared the opening of the investigation “a historic day for American steel and most importantly for American steel workers.”
Goncalves noted that many past trade cases were initiated in response to company requests.
“But this one is different, self-initiated by the government,” Goncalves said in the interview. “That makes for a much more compelling jump start for the case.”