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What Thomas Jefferson Has to Do With the Impending Trade Cases

As one of the founding fathers of the United States, Thomas Jefferson is a household name. The third President and the primary author of the Declaration of Independence, Jefferson strongly advocated for republicanism and is widely heralded as an icon of liberty and democracy.

In the wake of recent rumors on an impending trade case against foreign steel suppliers, and in the shadow of Jefferson’s birthday (April 13), we thought it would be fun to look at the global market through the eyes of this famous founding father.

While Jefferson surely couldn’t have imagined our current marketplace, these four quotes shed light on how he may have reacted to the recent developments.

#1: “Delay is preferable to error.”

In February, Platts likened filing unfair trade cases to chemo: “Both remedies are intended to protect the host from a serious threat, but there are side effects that are nearly as dangerous as the ailment itself.”

Rushing into a filing any earlier than absolutely necessary could indeed do more harm than good.

However, it seems the discussion about when and if to file against foreign suppliers is finally coming to a head. In a March 26 Congressional hearing in Washington, steelmakers, including U.S. Steel Corp president and CEO Mario Longhi insisted that the steel industry was in hot water – and could be wiped out if government action isn’t taken soon.

“The last time we were at these (import) levels, nearly half of America’s steel companies disappeared,” he said in a statement before the committee.

#2: “It is our duty still to endeavor to avoid war; but if it shall actually take place, no matter by whom brought on, we must defend ourselves. If our house be on fire, without inquiring whether it was fired from within or without, we must try to extinguish it.”

In keeping with his message to do nothing in haste, Jefferson also recognizes the importance of fighting back when the time is right.

As the bottom continues to erode on flat-rolled steel prices and steel companies report losses in Q1, it seems as though the time to fight may be drawing near.

With very high import levels in March, the industry expects that it will take service centers months to decrease bloated inventories, and many expect trade cases to be filed within the next 3-9 months.

#3: “Rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add ‘within the limits of the law’ because law is often but the tyrant’s will, and always so when it violates the rights of the individual.”

Jefferson believed that taking action for yourself when no one else is affected is one thing, but it’s entirely another to obstruct the rights of another for your own benefit. And even further – to trust that the laws and government will be able or willing to do the right thing.

As possibly a last stand, the US government sent a letter to the Chinese government asking them to limit the amount of steel sent to the US. However, it’s unclear whether the Chinese government is able to – or even has the desire to – affect the flow of materials reaching US shores.

Even as the Chinese work to stem the tide of a trade case, it may be too little, too late. And it’s worth noting that if a trade case is filed, the US government will likely file against more countries than just the Chinese.

During the Congressional hearings, Longhi noted that so far in 2015, 33% of the US market has gone to imports.

By comparison, between 2013 and 2014, US shipments rose only 3%.

If the mills have their way, those figures could help move the needle in regard to whether or not the trade cases will be filed.

According to the US International Trade Commission, the US mills must prove serious injury due to dumping – to date, this is something the mills are having a hard time doing, as the majority of them showed a profit last year.

#4: “Educate and inform the whole mass of the people. They are the only sure reliance for the preservation of our liberty.”

Jefferson felt that the education of the masses is the only way to preserve liberty, and now the mills are working to educate Washington and the industry beyond the formal definition of the trade laws.

Unfortunately, trade laws put into effect in the past are starting to show chinks in the armor. Because they were drawn up to focus most on whether companies are in the red before the decision is made to file a trade case, US mills are having a hard time pushing their agenda forward.

They’re arguing that a closer look at what constitutes injury should be examined. By working to educate on topics of cash flow, production, net income, employment, R&D and tech investment, the mills hope to educate not just the decision makers, but also the entire industry on how illegal dumping could fell the US steel industry if not reigned in.

When is “Made in the USA” actually made in the USA?