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Future Depends on Extension of Sect. 232 Tariffs to Nails

Three years ago, smart trade policy saved the U.S. steel nail industry. Tariffs were imposed on raw steel imports, providing important protections for American manufacturers. And they worked - steel imports decreased, investments in U.S. steel manufacturing and production increased, and thousands of new steelmaking jobs were created.

Unfortunately, bad actors have found ways to evade these measures and instead of dumping raw steel, today they're flooding the market with imported finished goods made from the very same raw materials the 232 tariffs sought to regulate. If we don't take action to close this loophole, the U.S. steel nails industry is headed for crisis again. That's a risk we can't afford to take.

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The 2018 tariffs, adopted to protect national security under Section 232 of the Trade Expansion Act of 1962 (Section 232), placed 25% duties on raw steel but not on finished products such as nails.

Foreign companies have exploited this loophole to make nails at lower cost than U.S. firms, and imported products are overwhelming domestic competitors, which now represent a small and dwindling portion of nails made in this country.

A proclamation issued by President Trump in 2020 attempted to address the circumvention, but it was challenged successfully in the Court of International Trade (CIT). That decision is on appeal, and the Justice Department has a deadline of Sept. 15 to file its brief. The American Steel Nail Coalition, representing all U.S. producers, will join as an amicus, filing a brief by Sept. 22 to support the U.S. Government’s effort to overturn the CIT’s decision, and re-impose 25% tariffs on nails, as well as other derivative products, to equalize the duty on raw steel and derivative products.

In a separate case on July 13, a Federal Appeals Court reversed the CIT and ruled that the President had the authority to increase Section 232 national security tariffs, at least in some cases, months after they were first implemented. That decision may provide support for the Government’s position in the nails case.

The U.S. nails industry crisis provides an opportunity for the Biden Administration to make good on its “Build Back Better” strategy, which puts strong emphasis on domestic manufacturing. An entire American industry with a history dating to the 19th century could be wiped out if the current imbalance continues.

Economic Policy Institute: 
Why Global Steel Surpluses Warrant U.S. Section 232 Import Measures

Department of Commerce's
Section 232 Investigation

Court of International Trade finds likelihood that government will succeed in fight to keep tariffs on nails:
“defendants have made a sufficiently strong showing that they will succeed on the merits on appeal.”

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