Senators Ask Administration to Intervene in Transformer Market With Canada, Mexico
Ohio's two senators and Sen. Bob Casey, D-Pa., are asking the commerce secretary and U.S. trade representative to convince Canada and Mexico "to either reduce their exports of down-stream GOES products to the United States, or utilize more U.S. GOES in the production of those products." In a letter that leaned heavily on the Commerce Department's conclusion that the import of transformer components from neighboring countries is a national security threat, they said grain-oriented electrical steel (GOES) is produced by Cleveland-Cliffs in two locations in Ohio and Pennsylvania, and supports 2,000 jobs. When a 25% tariff was imposed on steel, the market shifted so that cores, core parts and laminates became the imports for transformers, rather than the steel. Imports of GOES dropped by 56% the year after the tariffs began.
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Sen. Rob Portman, R-Ohio, and Sen. Sherrod Brown, D-Ohio, along with Casey, said that it's a problem that while the Commerce Department concluded that the import dependence for transformers and transformer components is a national security threat, the administration did not impose any tariffs or quotas to change the pattern. "Unfortunately, no action has been taken in response to these findings by the Department of Commerce. Specifically, the Section 232 report found that in 2019 over 95 percent of imported down-stream GOES products came from Canada and Mexico, yet neither country has actual GOES production," they wrote Feb. 9. The Commerce Department said most of the GOES imported into Canada and Mexico to make these products comes from Japan.
The Commerce Department declined to impose antidumping remedies on Japanese GOES in 2014, saying it was not harming the domestic industry (see 14082803).
Domestic manufacturers of transformers said it would be a mistake to add tariffs to protect the one remaining GOES producer, AK Steel, now a subsidiary of Cleveland-Cliffs. WEG Transformers USA told Commerce, "AK Steel already has a 70% market share of the current industry and they are not able to support significant growth and changes to the electrical grid that renewable energy is driving."