From the 1971 Nixon’s Trading with Enemy Act to the Barack Obama duties on Chinese steel imports, the safeguard of the steel industry – and the political support in the Rust Belt electoral basin – has been a priority for almost every US Administration in the last 50 years. Protectionism has been the prominent character in the latest Republican electoral campaign: no surprise at all, then, that the safeguard of the US steel industry currently ranks among the top priorities in the White House’s political agenda. This brief analysis is intended to provide a first assessment about the risks that an old-fashioned protectionist environment poses to the Italian steel companies. A journey through the analytics of Prometeia MIO, the business information platform of Prometeia, shows that the potential consequences could be relevant, therefore deserving a careful evaluation.
A preliminary remark: even though most of the Trump rhetoric is directed towards “unfair competition” from China, Beijing is unlikely to become the only target of the upcoming trade measures. Indeed, mostly due to the trade barriers raised during the latest months of the Barack Obama presidency, the share of Chinese steel on total US imports has already tumbled from 7% in 2014 to a little more than 1.5% in 2016, letting China fall out of the top 10 in exporters ranking. Then, when the Trump administration will decide to “insulate” the US steel market from foreign competition not the Chinese alone, but all the major exporters as well will be severely affected. Among these, only apparently placed in a second-tier position, also ranks Italy.
The 16th place that our country occupies in the ranking of the major steel exporters to the United States should not deceive. It is true that, for steelmaking as a whole, the market share of the Italian companies is relatively small, as they barely accounted for just 2% of the overall US steel imports value in 2016. Nevertheless, when it comes to the details, a much more important role for our country emerges, particularly for the high added-value, semi-finished stainless range of products. For example, regarding the angle, shapes and sections “long” products, Italy accounts for approximately 30% of total US imports (in value terms), making our country the biggest foreign supplier to United States. In turn, the high import penetration of Made in Italy stainless products into the United States highlights the significance of the US market to the Italian steelmakers. Indeed, almost 60% of the stainless ingots and 20% of the stainless angle, shapes and sections exported by Italy, just to mention the most relevant products, had been directed to the other side of the Atlantic between 2014 and 2016. [fig. 1]
It’s now clear that a U-turn on steel trade policy wouldn’t be without consequences for the Italian metallurgy. Indeed, not only is the US market relevant in terms of its relative scale with respect to the World steel market. It’s also among those with the highest growth potential. Specifically, the Prometeia MIO Market Finder tool identifies the United States as the market characterized by a unique combination of large size and ample development prospects for at least two micro-sectors belonging to the Italian Metallurgy: "Steel Pipes" and "Cold Steel Processing". As for the latter, the US ranks third among the top export destinations, with a double digit growth potential for the two-years period 2017-‘18. [fig. 2]
In a note published a few months ago we highlighted that – despite the Trump rhetoric - a trade policy harking back to a 1980’s status should be considered as an extreme-case scenario. The Italian companies of Made in Italy and Mechanics, which would be the most affected by a general retreat to pre-WTO protectionism, could be (relatively) confident that their export markets will not falter. Nevertheless, that is not case for the steelmakers. Given its political and symbolic importance, this is indeed an industry among the most exposed to the axe of the Department of Commerce - even more so if we consider that, when it comes to steel, the US Administrations historically shows little interest for the system of rules that a WTO membership imposes . In a matter of few weeks the Trump Administration is expected to announce the result of a “Section 232” investigation into whether steel imports threaten national security, a preliminary step before a comprehensive tariff on foreign steel could be raised. For the Italian steel industry, the matter now moves to Brussels, in what has all appearances of becoming one of the main confrontational field between Europe and the United States in the coming months.
 See, for example, the “Section 201” steel tariff that, lifted by the Bush administration in early 2002, was judged to be a violation of America's tariff-rate commitments by the WTO one year later.