In-depth Review of the DOC’s Findings on CORE Steel Subsidies
The U.S. Department of Commerce (DOC) recently issued the preliminary results of its annual administrative reviews on the countervailing duty order for certain corrosion-resistant steel products (CORE) imported from Mexico, Brazil, Canada, and Vietnam. The review period covers January 1, 2023, through December 31, 2023, and aims to assess whether these countries are continuing to provide countervailable subsidies to their steel producers, which could lead to unfair trade practices.
According to the DOC’s preliminary findings, all four countries were found to be offering countervailable subsidies to their steel industries. These subsidies are considered to distort market competition, providing unfair advantages to foreign steel producers by lowering their production costs. The potential result of these subsidies is a negative impact on U.S. manufacturers of CORE, which is a product vital to various sectors such as automotive, construction, and infrastructure.
Preliminary Subsidy Rates and Impact on Affected Countries
The DOC has determined a range of preliminary countervailable subsidy rates for each of the countries involved in the review:
• Mexico: Subsidy rates range from 0% to 1.56%.
• Brazil: Subsidy rates range from 0.33% to 1.72%.
• Canada: Subsidy rates range from 1.21% to 41.40%.
• Vietnam: Subsidy rates range from 0% to 140.05%.
These varied rates indicate that while some countries, like Mexico and Brazil, have relatively low subsidy levels, others, notably Canada and Vietnam, present much higher levels of subsidization. Particularly concerning are the exceptionally high rates found for Vietnam, with a subsidy estimate reaching up to 140.05%. This suggests that a significant portion of the steel products exported from Vietnam may be benefiting from government support, creating a serious competitive disadvantage for U.S. producers.
The Next Steps: ITC’s Role and Future Implications
The next step in the process will be the final determination by the DOC, which will occur after a period of public comment and further analysis. The final determination is expected later in 2025. If the DOC confirms its preliminary findings, the U.S. International Trade Commission (ITC) will conduct its own investigation to determine whether the subsidized imports are causing material harm or threatening material harm to the U.S. steel industry. This decision will be made either 120 days after the preliminary determination or 45 days after the final determination, whichever comes later.
Should the ITC find that the imports are indeed injuring the U.S. steel industry, the DOC may implement final countervailing duties on the affected products, which would increase the cost of steel imports from these four countries. This action could provide relief for U.S. steel producers by making foreign steel products more expensive, thereby promoting domestic production.
Key Impacts on Trade Relations and Steel Industry
These preliminary findings have significant implications for trade relations between the U.S. and the countries involved. While the goal of countervailing duties is to protect domestic industries from unfair foreign competition, they can also strain diplomatic and trade ties. Countries affected by such duties often push back through negotiations or, in some cases, retaliatory tariffs.
For the steel industry, this review underscores the ongoing challenges faced by producers in the U.S. As global steel production continues to shift, ensuring a level playing field is essential for maintaining competitiveness. The ultimate decision by the ITC and the DOC will likely influence not only trade policies but also the broader outlook for the global steel market.
