As a result, our manufacturers are constantly innovating and require
superior-quality and cost-effective materials, including steel, to meet
this consumer demand. The steel safeguard tariffs, imposed by President
Bush last year, have placed a heavy and unnecessary burden on our industry
that threatens our ability to provide this value to the consumer.
The Association of Home Appliance Manufacturers (AHAM), the Air Conditioning
and Refrigeration Institute (ARI), and the Gas Appliance Manufacturers
Association (GAMA) all oppose the steel safeguard tariffs imposed under
Section 201 of the Tariff Act. In fact, in testimony before the U.S.
International Trade Commission (ITC) last month, I advocated the immediate
termination of this program. If allowed to continue, I believe that these
tariffs will subject appliance makers to continued substantial cost pressures
and harm U.S. jobs.
Our industry's case is compelling. Each year, AHAM, ARI, and GAMA member
companies ship hundreds of millions of products and consume more than
6 million tons of steel, the majority of which is supplied by domestic
steel producers. Together, our members employ nearly 500,000 U.S. workers,
and we contribute more than U.S. $50 billion to the U.S. economy each
year. My testimony before the ITC explained how the steel safeguard tariffs
have had a direct and negative effect on our industry - appliance makers
have experienced dramatic price increases for domestic steel products,
changes in domestic steel supplier behavior, and difficulties in obtaining
quality steel from domestic steel producers. The steel tariffs have also
had a pernicious effect throughout the U.S. manufacturing sector. According
to a study by the Consuming Industries Trade Action Coalition (CITAC),
more than 200,000 Americans lost their jobs as a result of higher steel
prices in 2002, resulting in more than $4 billion in lost wages. Such
overwhelming data cannot be ignored.
Appliance makers have been hit particularly hard by these tariffs because,
in large part, they are considered to be "price takers" in
the marketplace. When our companies face significant increases in input
costs, such as steel, they cannot pass these increases onto customers.
This is the result of a highly competitive industry and an over-capacity
in appliance manufacturing throughout the world. Ironically, the domestic
home appliance manufacturing industry is in a similar position to the
domestic steel industry with regard to intense global competition and
the inability to pass costs through to the consumer.
The magnitude of the price increases has been more severe than we originally
anticipated. Several of our members have seen prices for domestic steel
increase from 17 percent to 30 percent from levels prior to the imposition
of the tariffs. Increases from a year ago in steel prices on the spot
market have also averaged more than 37 percent. Due to a highly competitive
industry and an over-capacity of appliance making, these price increases
were necessarily absorbed by our manufacturers and resulted in corresponding
cutbacks in production.
The appliance industry has traditionally lagged behind the overall economy
when it comes to increasing the prices for its products. According to
the Producer Price Index, from 1972 through 2002 average prices across
the U.S. economy increased 320 percent for all commodities, but only
79 percent for major appliances. Major appliance prices have increased
less than those of most other goods and services due to an intensely
competitive industry, higher production efficiencies, and the traditional
consumer resistance to higher purchase costs. These moderate price increases
for home appliance products are remarkable in light of the fact that
our industry is heavily regulated and must expend significant resources
in order to comply with federal energy efficiency standards.
In addition to the dramatic price increases, AHAM member companies have
experienced changes in the behavior of domestic steel suppliers since
the imposition of the safeguard tariffs. This has included decreased
flexibility in setting delivery dates, longer lead times for deliveries,
and even missed deliveries. In addition, the price increases have forced
our manufacturers to change their sources of domestic steel. As a result,
they have faced difficulties in ensuring access to the quality of steel
that they require. This is a significant issue for our industry because
quality is a hallmark; our companies require the highest quality steel
I must stress, however, that our industry appreciates the plight of
the domestic steel industry and supports its efforts to ensure that trade
in steel is done fairly and in accordance with multilateral trade rules.
The steel safeguard tariffs, however, are not an appropriate tool for
that purpose. The World Trade Organization agreements provide for countries
to impose anti-dumping and countervailing duties on imports from countries
that subsidize their steel manufacturers' production, and producers who
unfairly dump steel on the U.S. market. In fact, the domestic steel industry
already benefits from numerous antidumping and countervailing duty orders
currently in effect. The 201 steel safeguard remedy, however, does not
take these antidumping or countervailing duty orders into account, and
instead imposes additional duties on a wide range of steel products.
We do hope for a resolution of the problem facing the domestic steel
industry that provides the industry with the relief that they require,
while not impairing our industry. The time has come to terminate the
Section 201 steel safeguard tariff. This is essential in order to preserve
the health of our industry and the economy as a whole.
opinions known on the subject of Section 201 Steel Tariffs.