Tons of steel used per billion dollars of constant-dollar* GDP:
2018-2020: 5,360 tons
1993-1997: 9,190 tons
1968-1972: 18,850 tons
* U.S. Geological Survey reports of “apparent consumption” of steel, divided by BEA’s calculation of GDP in constant 2012 dollars. Five-year averages attempt to dampen the effects of single-year booms or crashes.
Provisionally settling the dispute sparked by the Trump administration’s 2018 “national security” tariffs on steel and aluminum, the U.S. and European Union agreed last Saturday to a formula: 3.3 million tons of European steel products covered by the tariffs, and 18,000 tons of aluminum, will come in duty-free, with legacy tariffs of 25% and 10% still covering any additional tonnage. Official papers on this and a bit more below, but some background to the argument:
In long-term context, tariffs on aluminum tariffs were relatively new. The tariffs on steel, though using an unusual law, have a very long back-story. Analogous earlier policies, bringing analogous protest from U.S. metal-buying industries and foreign governments, date back at least to the 1970s, and range from minimum prices for imports in the Carter administration, to import quotas and “voluntary restraint agreements” in the Reagan administration, and “safeguard” tariffs in the second Bush administration. Along with these big, global, once-a-decade efforts, “trade remedy” litigation brings about a dozen anti-dumping and countervailing duty penalties per year on wire rod, welded pipe, cold-drawn alloy tube, etc., from individual countries.
What explains such a long, recurrent pattern? One obvious phenomenon, also about half a century old: the U.S. economy is getting “lighter” by using less raw materials generally, and steel use in particular hasn’t grown since the 1960s. Single-year bookends illustrate the point:
> Left bookend: In the turbulent boom-year 1968, U.S. GDP in constant dollars (using BEA’s real-GDP series) hit $4.8 trillion and employed 69 million workers. That year, Americans used 106 million tons of steel for construction projects valued at 4.4% of GDP (Lake Point Tower, the Desmond Bridge at Long Beach, the Tower of the Americas in San Antonio), finish up the Eisenhower-era National Highway System, and provide the framework for 10.8 million cars and trucks.
> Right bookend: In 2019, the constant-dollar pre-COVID economy hit $19 trillion and employed 152 million workers. It used 100 million tons of steel for construction projects valued at a slightly lower 4.2% of GDP, along with 10.9 million autos, and so on. In COVID-stricken 2020, use dropped to 82 million tons.
More systematically, since the late 1960s U.S. steel use has remained flat in total tonnage, and relative to economic output has dropped by about 75%. The totals look like this, using five-year averages to avoid distortions by 1968-like booms or 2020-like busts: an average of 95 million tons of steel per year from 1968-1972, in a real-GDP U.S. economy of about $5 trillion; 98 million tons from 1993-1997, in an economy that had doubled in real terms to $10 trillion; and again 95 million tons a year in 2016-2020, for an economy of $18.4 trillion. Or, relative to real-dollar output, a half-century ago $1 billion of constant-dollar GDP meant orders for 18,850 tons of steel; in the mid-1990s it meant 9,200 tons; today, it means 5,400 tons.
In such circumstances, absent a structural solution in new demand at home or abroad — the logical candidate just now is larger long-term public infrastructure investment — any increase in imports feels like it’s coming at the expense of local production. Hence, presumably, the constant return to import limits.
USTR and the Department of Commerce announce a U.S.-EU agreement, with details and quota numbers in the links at bottom of this section.
Why would steel use fall? It is tempting, but at minimum not the whole answer, to say that the use of import restrictions is itself part of the reason. The logic would be that minimum import prices, VRAs, safeguards, 232 tariffs, etc. push up steel prices, upset ‘downstream’ industries like construction firms and machinery makers, and when sustained over time convince them to substitute other materials. But if so, we’d expect use of other metals and materials to rise as steel use drops. In fact, though, U.S. use of other metals — and raw materials in general — is also flat in absolute terms and down relative to output. Relative to constant-dollar GDP, lead use is down by about 66%, cement by 60%, copper 75%, crushed stone 50%, crude oil by 66%, and tin more than 80%. So if import limits haven’t been solutions, they also don’t look like the main problem.
Instead, the U.S. economy as a whole has become steadily ‘lighter’: in aggregate, the GDP shares of information, professional and business services, health, arts, and education have risen from 13.1% of GDP in 1970 to 22.1% in 1995 and 27.9% in 2020; simultaneously, the GDP shares of big metals-buyers in durable-goods manufacturing and construction have dropped from 18.3%in 1970 to 13.3% in 1995 and 10.2% in 2020.
The U.S. Geological Survey reports on production, imports, consumption, etc. of 124 metals and minerals from 1900 forward (use “Mineral Commodity Summaries” for 2016-2020 data), which can be found here.
… and for data before 2018, use this link.
USITC’s list of anti-dumping and countervailing duties in force can be found here.
The World Steel Association has production data in detail from 2002 forward, found here.
For perspective, a 1984 National Bureau of Economic Research report on steel import limits can be found here.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
