Kelly calls on U.S. Trade Ambassador Tai to help secure domestic Grain Oriented Electrical Steel production

WASHINGTON, D.C. -- Today, during a full Ways & Means Committee hearing addressing trade, U.S. Rep. Mike Kelly (R-PA), Chairman of the Ways & Means Subcommittee on Tax, called on U.S. Trade Ambassador Katherine Tai and the Biden Administration to defend domestic steel production amid a surge of foreign steel imports from countries including China and Mexico.

From 2017-2022, there has been a 73% increase in Mexican steel imports, according to industry statistics. Further, Mexico also recently imposed new steel and aluminum tariffs of its own on third countries to help guard against transshipment into the U.S. market.

Kelly called on the Biden Administration to deter unfair trade practices by foreign nations and to utilize fair trade policies to protect domestic Grain Oriented Electrical Steel (GOES) production, a critical part of distribution transformers and our nation's electrical grid. The last domestic GOES producer is located in Rep. Kelly's district at Cleveland-Cliffs Butler Works in Butler, Pennsylvania.

"For the last year, the Biden Administration had been picking winners and losers in the steel industry - and shut down this facility - which would be bad for our national security, our economic security, and our steelworkers in Western Pennsylvania," said Rep. Kelly. "Our trade agenda must deter unfair trade practices by foreign nations and ensure resilience and strength in the American economy."

You can watch the exchange here.

Each year, the Ways and Means Committee holds a hearing with the United States Trade
Representative to address the President's trade agenda. During Tuesday's hearing, Rep. Kelly and committee members addressed concerns that the Biden Administration is not putting forward a trade agenda that wins for American workers, farmers, or manufacturers. Members also addressed concerns that the U.S. is losing ground to China and that China is waging an aggressive trade agenda that cheats American companies and consumers.

Background about GOES

Earlier this month, Kelly led a successful effort to change a U.S. Department of Energy (DOE) rule that threatened 1,300 jobs at the Cleveland-Cliffs Butler Works plant. The rule required distribution transformers to transition away from Grain Oriented Electrical Steel to Amorphous Steel, the majority of which is produced overseas including in China. The last domestic GOES producer is located in Rep. Kelly's district at Cleveland-Cliffs Butler Works in Butler, Pennsylvania.

In January 2023, the U.S. Department of Energy (DOE) published a proposed rule that risked exacerbating existing supply chain challenges for distribution transformers and creating a shortage of related components. This legislation follows a letter Rep. Kelly sent to U.S. Energy Secretary Jennifer Granholm in December 2023 opposing the Biden Administration's proposed rule to mandate the use of amorphous metal (AM) cores instead of Grain-Oriented Electrical Steel (GOES) cores. GOES cores are used in electrical distribution transformers across the country.

Background about steel imports

Based on the 2019 U.S.-Mexico-Canada Agreement (USMCA) - in relation to steel and aluminum trade with Mexico - the United States can reimpose Section 232 tariffs if imports from Mexico surge in violation of this agreement. Additionally, the U.S. Trade Representative (USTR) has utilized the USMCA labor rapid-response mechanism 22 times related to labor concerns at individual facilities in Mexico. However, the Biden Administration has openly neglected to pursue enforcement of the Phase One Agreement with China despite China's violations of the agreement.

The Mexican government agreed they would limit their imports to historic levels, in order for President Trump to exempt them from the Section 232 steel tariff program. Mexico has failed to live up to that agreement and has taken advantage of its favored trade relationship to substantially increase steel exports to the United States. Mexico has become the world capital of circumvention, allowing steel by allowing auto parts and manufactured products from China and other nations to be routed through Mexico to the U.S. simply to achieve favorable tariff treatment.

USTR also dropped existing Trump Administration enforcement actions related to several countries' discriminatory digital services taxes (DSTs), due to the Biden Administration's position on the Organization for Economic Co-operation and Development (OECD) Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy. The Biden Administration has maintained some Trump Administration enforcement actions, including tariffs on imports from China and imports of steel and aluminum products.