[Congressional Record Volume 149, Number 130 (Monday, September 22, 2003)]
[Senate]
[Pages S11746-S11748]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             STEEL TARIFFS

  Mr. ALEXANDER. Mr. President, I would like to make a few remarks 
about the report of the International Trade Commission on steel 
tariffs, which was made over the weekend. Late last Friday night, the 
International Trade Commission released its report on the impact of the 
steel tariff. The steel tariff is a tax. It is a tax that the 
administration imposed in March of 2002 on at least 10 different kinds 
of imported steel, including the kind of steel that is used to make 
automobiles and trucks in this country. The effect of the tariff was to 
increase the price of that steel up to 30 percent. It had a noble 
purpose. The President hoped to save some steel jobs in this country.
  The International Trade Commission (ITC) over the last several months 
has taken a lot of testimony and done a good deal of study to see what 
was the impact of that decision made in March of 2002 on both the steel 
industry, the steel producing part of our country, and on the 
automobile industry and on the other steel consuming parts of our 
economy. The report's finding on the overall economic impact of the 
steel tariff was not very surprising. According to the report, the 
steel tariff has saved a few steel jobs by raising the price of steel. 
But it has cost U.S. manufacturers, the auto parts suppliers, for 
example, over $680 million. The report also claims that somehow to make 
up for this, the tariff revenue to the U.S. Government, collected on 
the steel that came in from outside the country, was about $650 
million. So the ITC estimates that there was not too much damage to the 
economy, only a $30 million loss in GDP.
  But what that overlooks is who paid the tax? It was, in part, the 
struggling auto parts suppliers who are manufacturing parts in this 
country in competition with auto parts suppliers all over the world. 
They paid the tariff to the federal government directly when they 
shipped in foreign steel themselves and in part indirectly when they 
paid higher prices to their distributors

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who brought in steel from abroad for them. They paid the tax.
  What has happened over the last year and a half, when all of us have 
been making speeches about how our greatest economic challenge may be 
how to keep our manufacturing jobs from moving overseas, is that we 
have imposed upon our manufacturers a tax, a tariff that has increased 
their costs by up to 30 percent and made them less competitive.
  As a result, they have done what manufacturers have to do. Rather 
than lose money, they have laid off a few employees or they have begun 
in a few cases--I know this in my own State of Tennessee; we are a big 
manufacturing State and one-third of the manufacturing jobs are 
automotive jobs--they have begun to move their parts suppliers to 
Mexico or Japan or Korea or other parts of the world where parts can be 
made, paying the global steel price.
  So, yes, we may have brought in $650 million to the U.S. Treasury in 
the tariff, but it has been paid on the backs of the steel-producing 
auto parts suppliers and other steel consumers of this country, and it 
has had the effect of driving jobs overseas.
  The report also illustrated something we knew to be true; that the 
steel tariff is hurting steel-consuming firms all across the United 
States, from auto parts suppliers to home appliance manufacturers, to 
tool and die shops to metal stamping facilities. All of these steel-
consuming firms have been affected by the burden of the steel tariff in 
some shape or form.
  Here are a few things the report said: One-half of the steel-
consuming firms surveyed reported they had difficulty in obtaining 
steel in the qualities and quantities they needed. That is an added 
cost.
  Second, almost a third of these firms relocated or shifted production 
to foreign plants, facilities, after the implementation of the tariff.

  That is exactly what we do not want in this country is any kind of 
new cost added by the Federal Government which causes a parts supplier 
in New Hampshire or Tennessee to move a plant overseas.
  Third, one-quarter of these steel-consuming firms reported that their 
customers shifted to purchasing finished parts or assemblies overseas 
as a result of the steel tariff.
  Let's say you are making a sunroof in Gordonsville, TN, and the cost 
of steel goes up 15 or 20 percent and that is the major raw material 
you are using. The Nissan Smyrna plant in Tennessee can buy that roof 
from just down the road in Gordonsville, everything else being equal, 
but the sunroof can also be made to a high standard of quality in many 
other countries in the world--in Japan, in Korea, in Mexico, in Canada. 
If costs are too high, too much out of whack, then the American 
automobile plant, in order to keep its costs down so it can be 
competitive, will buy that finished part from overseas. That is not 
subject to any tariff.
  Fourth, almost one-third of these firms reported the contracts they 
had in place to purchase steel were broken or modified after the tariff 
was imposed and reported a loss in profits due to these problems of 
approximately $190 million.
  Finally, one-third of these firms reported longer lead and delivery 
times.
  This also is very important. There is such a thing as just-in-time 
delivery in the automobile business. That is why in Tennessee we have 
gone from having two dozen auto parts suppliers 12 or 14 years ago to 
more than 950 today. The Toyota plant and the Nissan plant and the 
Saturn plant and the Mercedes plant--all of them located in the South, 
some still located in the Midwest--they like to have their parts 
suppliers nearby. If those firms have longer lead and delivery times, 
it makes that just-in-time delivery advantage less reliable.
  In addition, the report further highlighted the impact the steel 
tariff had specifically on auto parts suppliers. There are a lot of 
automotive people in the country. Historically, they have been in 
Michigan and in Ohio--the song ``Detroit City'' was written about 
Tennesseans who went to the Midwest to get good jobs and send the money 
home, and then they would come back themselves one day. Now, a lot of 
those auto parts suppliers have followed the auto plants to the rest of 
the country, to the Southeast and the Deep South.
  As I mentioned earlier, Tennessee is home to about 950 of these auto 
parts suppliers. They make up about one-third of all our State's 
manufacturing jobs.
  Mr. President, 85 percent of the auto parts suppliers surveyed in the 
ITC report said that their steel prices in the United States were 
higher than global prices; 31 percent reported that customers had 
shifted purchases to buying finished parts or assemblies overseas as a 
result of the tariff; 74 percent reported changes in contract prices 
for steel; and 55 percent reported the steel tariff was the only 
important factor in these changes in steel prices. Mr. President, 79 
percent reported an inability to pass on steel price increases to 
customers.
  There is a lot of back and forth about just to what extent these 
steel prices have gone up. The report mentioned a variety of figures. 
It mentioned a figure of an 8 percent increase in hot bar steel. I 
wonder if maybe taking a snapshot of 8 percent in March of this year 
over March of last year ignores some of what goes in between.
  But here is what some of the auto parts suppliers said in testimony 
before the International Trade Commission was the effect of the steel 
tariff on steel prices.
  Arvin Meritor said its price increases were 25 percent to 40 percent 
on cold rolled and galvanized steel. Delphi said its prices increased 5 
percent to 48 percent. DURA saw its prices increase 30 percent. Federal 
Mogul saw its prices increase 25 percent. Metaldyne saw its prices 
increase 10 percent. Transpro saw its prices increase 25 percent.
  Maybe some were lower and maybe some were higher, but these plants 
found in a very competitive business that even a few pennies more in 
cost per part makes a difference in their ability to keep a job in the 
United States. They found their costs suddenly way up--15 percent, 20 
percent, or 25 percent. All of these burdens have meant extra costs to 
steel-consuming firms--extra costs that have affected steel-consuming 
jobs all across America. The steel tariff may have saved some steel-
producing jobs, but it has already destroyed a lot more steel-consuming 
jobs. The findings of the ITC report alone should give the President 
ample reason to end the steel tariffs.
  I spoke on this subject on July 16 in this Chamber. I tried to point 
out at that time how both steel-consuming and steel-producing jobs are 
important to our country. But if that is all you are considering, there 
are a whole lot more steel-consuming jobs than there are steel-
producing jobs. For example, in Tennessee, there are about 328,000 
steel-consuming jobs. There are only about 3,000 steel-producing jobs. 
There are 100 times more steel-consuming jobs than steel-producing 
jobs.
  The United States has 12.8 million steel-consuming jobs--2.1 million 
of which are in the auto business. The United States has 226,000 steel-
producing jobs.
  Everybody's job is important. Just to come along and say we want to 
save steel jobs cannot be used as a rationale for a steel tariff when 
the effect is that it destroys a lot more steel-consuming jobs. Even in 
States such as West Virginia and Pennsylvania, there are a lot more 
steel-consuming jobs than there are steel-producing jobs. There are 
more auto jobs in Pennsylvania than there are steel-producing jobs. 
That is no reason for the steel tariff.
  The economy is beginning to recover. Manufacturing is up. 
Manufacturing jobs are not up. We are more productive. So there are 
fewer jobs. But manufacturing for the last 3 months, according to the 
Wall Street Journal, is up.
  I strongly believe this recovery is a direct result of the 
President's job and economic growth plan. The last thing we need now is 
to continue any new costs such as the steel tariff on a major 
manufacturing sector that slows down our economic growth. I fear that 
if the steel tariff remains, we will see more plant costs during 2004 
in Tennessee and across America.
  I believe the President has made an honest, good-faith effort to save 
steel jobs. But it has backfired by destroying auto and other steel-
consuming jobs. I hope he takes into account the information that was 
revealed in this report this weekend. The President is a very good 
listener. He has given this decision almost 2 years to operate. I hope

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he will decide based on the fact that the tariff is destroying auto 
jobs that the best decision he could make for the American worker is to 
end the steel tariff, and to end the steel tariff now.

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