Effect of Quotas and Tariffs on U.S. Steel Imports and Exports

Quotas, which are defined as a limited quantity of a particular product that can be produced, imported, or exported, are generally used to provide support for domestic producers. This can be seen in the U.S. steel industry in which there are not only quotas but also tariffs. Quotas set by President Trump are supposed to discourage imports and encourage exports and domestic consumption. They are, however, doing the opposite. According to the article, the U.S has imported 15.9 million tons of steel from January through August, a 4% increase from the full year of 2018. With these protectionist measures in place, some companies are moving out of countries that are subject to tariffs, i.e. China, to countries that aren't, i.e. Vietnam or Malaysia. According to John Anton, an associate director with IHS Markit, China and India are creating a global surplus of steel and the oversupply won't be corrected unless these two countries cut their output. This is beneficial to steel buyers but bad for steelmakers. 

Meanwhile, the domestic market for US-made steel isn't performing well. After an original increase in price from $600-$900 per ton of hot rolled steel, prices have fallen to less than $500 a ton. Immediately after the tariffs by Trump were enacted, U.S. producers began creating new capacity. This caused the prices to increase to levels that weren't sustainable over a long period of time. This caused imports to increase. Demand has faltered in 2019 and domestic steel price is now lower than import prices for many of the products it creates. 

Scrap metal is also hitting a roadblock. Used as a key raw material for U.S. mini-mills, scrap metal demand has decreased exceptionally. Rising scrap prices would justify price increases for finished products, but this just isn't happening. These tariffs and quotas are causing U.S. companies to lose business. Jimmy Lyons, CEO of the Alabama State Port Authority, says that "there's no question we've lost business and the state of Alabama has lost export markets due to U.S. steel tariffs. Some of this loss was initially attributed to the tariffs against Mexico and Canada, but even with those duties now lifted, the business doesn't seem to have come back".