Steelmakers want the United States to put restrictions on imports from five nati
ID: 1138579 • Letter: S
Question
Steelmakers want the United States to put restrictions on imports from five nations, alleging unfair pricing of steel for the automobile and construction industries.
Source: Wall Street Journal, June 3, 2015
Explain who in the United States gains and who loses from restrictions on steel imports? (2 points)
Will import restrictions impact the prices of automobiles and office towers and other steel related products? (2 points)
What is dumping? Explain who in the United States loses from China’s dumping of steel? (2 points)
Explain what an antidumping tariff is. What argument might U.S. steelmakers use to get the government to raise the tariff on steel imports? (2 points)
Having learned about the dumping issues, what is your opinion about the recent increase in steel tariff of 22% by the U.S government? (2 points)
Explanation / Answer
Answer 1-Domestic steel producers are the gainer because after putting restrictions on imports, supply will decrease which will in favor of domestic steelmakers. The companies who are an importer of the steel are the loser as for them import will become expensive.
Answer 2- Restrictions on steel industry will have negative consequences in the domestic economy as well. The United States manufacturing and construction industries rely on domestic and foreign steel to create finished products. Restrictions on steel imports limit choices and increase costs of these industries( example automobiles, office towers, and other steel related products). Those costs are ultimately borne by American consumers and act as a tax on everyday goods made from steel.
Answer 3- Dumping is the practice of selling a product in a foreign market at an unfairly low price in order to gain a competitive advantage over other suppliers . Employment in the steel industry has plummeted and steel plants are caused by a broad range of factors such as a strong dollar, failure of the integrated steel mills to compete with mini-mills.
Answer 4- An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. The US steel industries argue that they have faced an existential assault for more than a decade from China. China has flooded the market with excess steel tonnage and driven down the price of steel to the point where domestic producers have difficulty in making money.
Answer 5- Imposing tariffs to protect one industry often results in pain for another.
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