US steel, auto industries battle over tariff issue

Washington, October 18:

US automakers joined their Japanese competitors on Tuesday to argue before the US International Trade Commission for an end to 13-year-old steel tariffs.

They said the steel industry had changed enough in recent years to survive without protection from imports from Japan, Canada and other countries.

“The restructuring of steel has created a very different industry,” said Mustafa Mohatarem, chief economist for General Motors Corp. “It is not just an industry that is ready to face competition. It is an industry that needs more competition.”

Robert Lighthizer, a steel industry lawyer, said he doubts that $472 (euro375) worth of steel in a $27,000 (euro21,560) car is causing US automakers’ woes, especially when the more profitable Japanese companies are paying the same steel costs as their American counterparts. Steel makers “are only making $19 (euro15) per vehicle,” he said.

“Does that sound like market power to you? That’s not even enough for a packet of air fresheners.” The future of the tariffs is crucial enough to jobs and profitability that 11 lawmakers interrupted their campaigning for the November 7 midterm elections and returned to Washington to appear before the commission.

Two Michigan congressmen said the tariffs should end. The rest spoke in favor of extending them for five more years against galvanized steel from Japan, Canada, Australia and other countries.

A central dispute is how much profit steel makers get from high-end corrosion-resistant steel, 1,000 pounds (455 kilos) of which goes into the average car. Steel companies say they’re earning 5.2 per cent; the car companies say it’s 12 per cent.

On the other hand, the automakers say car buyers are feeling the effects of higher steel prices.