Inflation is finally subsiding. It's welcome news for families who've struggled to keep up with rising costs of food, fuel, and transportation. Unfortunately, an Ohio mining and steel conglomerate called Cleveland-Cliffs is petitioning the Biden administration to impose a 'can tax' that could increase certain grocery costs by up to 30 percent.
The company wants the Commerce Department to slap massive tariffs -- up to 300 percent -- on steel shipments from abroad, even if it means higher consumer prices.
If Cleveland-Cliffs has its way, tariffs would apply to 'tinplate' steel imports from Canada, China, Germany, the Netherlands, South Korea, Taiwan, Turkey, and the United Kingdom. Tinplate is used to make containers for food, coffee, and chemical sprays -- among other things Cleveland-Cliffs accuses foreign steelmakers of selling ultra-low-cost tinplate on U.S. markets. Imports are undermining America's domestic steel industry, their argument goes. The company is also accusing China of unfairly subsidizing its own tinplate producers.
Cleveland-Cliffs' focus on China is a smart PR strategy meant to rile up policymakers eager to counter Beijing's growing influence. But it doesn't align with the facts: Less than 10 percent of U.S. tinplate imports originate in China, a far cry from a national security crisis.
Fortunately for consumers, the Department of Commerce recently found these claims don't hold water. In an August preliminary decision, its analysis showed zero evidence of less-than-fair-market-value steel coming from five countries: the Netherlands, Taiwan, South Korea, Turkey and the United Kingdom. The extremely low preliminary duty rates on Canada (5.29 percent) and Germany (7.02 percent) further confirms that there is no merit to dumping claims.
The reason the United States imports so much tinplate steel is far more benign than what Cleveland-Cliffs asserts. The fact is that some U.S. steel producers who previously specialized in tinplate have re-focused on other, higher-margin steel products, like steel used in machinery and vehicles. Even at full bore, U.S. producers would only be able to fulfill around 50% of domestic tinplate demand.
Not only do U.S. can manufacturers and consumer packaged goods companies need more tin mill steel to meet consumer demand, they need specific kinds of tin mill steel that aren't made by Cleveland-Cliffs or its competitor, U.S. Steel. Thus the need for imports, because the quality and type of tin mill steel used is critical to ensuring product safety.
It would be great if American can manufacturers could source American tin mill that met quality and quantity needs. But rather than competing fairly by asking for help investing in capacity to meet that demand, Cleveland-Cliffs is resorting to tariffs that will simply raise the costs paid by everyday consumers.
Their proposed course of action goes directly against the broader interests of American consumers and the U.S. economy. The organization I lead, the Consumer Brands Association, recently released studies showing the tariffs that Cleveland-Cliffs proposes could result in up to 30 percent price increases for certain groceries, like canned food. That would come down especially hard on low-income families who rely on food banks, where canned goods and other nonperishable items are staples. One study also shows that Cleveland- Cliffs' proposed tariffs, if implemented in full, could jeopardize nearly 40,000 manufacturing jobs by increasing the cost of tinplate.
The Department of Commerce may have rebuked many of these proposed tariffs in their preliminary decision -- but a final decision, which will be made early next year, still looms. It's imperative that the Biden administration continues to side with consumers come 2024.
Americans are finally getting a much-needed break from historic inflation. Massive new taxes would reverse this encouraging trend and subject families to new financial pain.
David Chavern is president and CEO of Consumer Brands Association, the trade association for America's $2.1 trillion food, beverage, and consumer products industry.