Section 232 tariffs critical to combat trade distortions: Cleveland-Cliffs CEO

Published by: Alesha Alkaff<>
25 Feb 2025 @ 17:05 UTC
The recently imposed Section 232 tariffs on steel enacted by US President Donald Trump are vital in curbing steel overproduction and overcapacity, top executives at Cleveland-Cliffs said in the company’s fourth-quarter earnings call on Tuesday February 25.Trade distortions enabled by foreign countries supporting steel overproduction continue to be a major problem regarding trade. The steel industry has been dealing with unfair competition from foreign producers for decades, Lourenco Goncalves, chairman, president and chief executive officer, said on the call.
Goncalves expanded on the trade issues facing the steel market, including the dumping of artificially cheap steel, subsidies granted by foreign governments to their steel producers, weak environmental regulations and insufficient repercussions for bad actors manipulating the global market.
The CEO’s remarks on protecting the domestic steel industry comes a day after members of Congress in Washington introduced the Leveling the Playing Field 2.0 Act, a bipartisan legislation aimed at cracking down on unfair trade practices.
The American steel industry has faced repeated surges of unfairly traded steel imports from many countries and regions. Trade-distorting economic policies by China and other countries have contributed to a massive global overcapacity in steel, estimated to be 573 million metric tons globally last year, Kevin Dempsey, president and CEO of the American Iron and Steel Institute, said in a statement on Monday February 24.
The Steel Manufacturers Association president, Philip Bell, similarly supported the legislation.
Our current trade laws have not kept up with China’s constantly evolving threat to domestic manufacturing. The Leveling the Playing Field 2.0 Act was designed to give our government the appropriate tools to safeguard impacted industries and American workers, Bell said on Monday.
President Trump’s 25% tariffs, set to take effect on March 12, are critical to addressing the steel market’s trade distortion issues, Goncalves said.
President Trump’s executive order was issued on February 10 and eliminated exemptions and alternative arrangements for some countries.
Most recently, Trump threatened to impose tariffs of around 25% on automobile and semiconductor imports to the US on February 18.
In 2024, the number of imported cars sold to consumers was higher than the number of domestically-produced cars sold, Goncalves told investors on the call.
That is exactly why tariffs, and a strong industrial policy are necessary to protect and strengthen the American manufacturing base instead of letting it continue to erode, Goncalves added.
President Trump’s executive order also expanded the scope of the tariffs to cover derivative steel products, a move Goncalves said will benefit Cleveland-Cliffs’ customers in the automotive sector.
Cliffs’ Stelco acquisition to benefit from 25% tariffs The 25% tariffs imposed on steel will benefit Cleveland Cliffs’ $2.5 billion acquisition of Canadian steelmaker Stelco Holdings, Goncalves said on the call.
The best financial year for Stelco in the previous decade was 2018, when 25% tariffs on Canadian steel imports were in place…We fully expected that to be the case again…Stelco sells more than half of its output in Canada, and we compete with other Canadian suppliers who send the material into the US, Goncalves said on the call.
The transaction, first announced July 15, cleared a key regulatory hurdle from the US Department of Justice’s antitrust review, Cleveland Cliffs said on Tuesday October 8.
The acquisition includes Lake Erie Works in Nanticoke, Ontario, a facility that can produce 3.1 million short tons of steel per year from its blast furnace operations, as well as Hamilton Works in Hamilton, Ontario, a cokemaking and steel finishing facility with cold rolling capacity of 1 million tons per year and coating capacity for 600,000 tons per year.