Trump proposed a probe on the impact of steel imports on the nation’s national security via section 232 of the 1962 Trade Expansion Act, in April. The results of the investigation are expected to be released this week.

Why the probe?

The Trump administration believes that China and other global steel exporters have been dumping cheap steel into the US market and causing steel facility closures and massive layoffs. There are also concerns that given steel’s role in the manufacturing of US weapons, overreliance on unreliable partners for the supply of steel could threaten national security. If the probe establishes a potential threat to national security, Trump could restrict steel imports by imposing tariffs/quotas.

Imposing tariffs is not a cure-all for restoring American jobs

Domestic US steel stocks that include U.S. Steel, AK Steel, NUCOR went up on prospects of reduced competition from cheap imports following the announcement of the probe. But the imposition of tariff/quotas could have repercussions for other American companies as other nations initiate retaliatory action on US exports. And while domestic steel producers would benefit from the tariffs, other sectors that rely on cheap imported steel (consumer appliances, automotives, construction,etc.) could see a rise in their costs.

Will this step help restore American jobs?

It is widely believed that the decline in the US steel industry is the result of automation and supply glut. Imposition of tariffs could provide a temporary relief but not help in altering the changing long-term trend of automation.

Read more about US steel stocks here