According to news reports, Donald Trump will sign an executive order today to require that most of the steel and iron used in federal contracts must be sourced from US producers. Current “Buy American” regulations call for US-produced material to comprise at least 50 percent of total iron and steel content used in government projects. The new proposal would increase the threshold to 95 percent.
For other commodities, the Trump administration will propose an increase from 50 percent to 55 percent, eventually rising to 75 percent.
In a statement, the American Iron and Steel Institute (AISI) said, "Strong domestic procurement preferences for federally funded infrastructure projects are vital to the health of the domestic steel industry, and have helped create manufacturing jobs and build American infrastructure."
However, sources tell SteelOrbis that today’s announcement might be a strategic way to increase US domestic steel demand amid weak US steel prices.
US steel benchmark prices have gradually declined over the last year after a swift rise in early 2018 following the implementation of Section 232 tariffs. At the same time, US steel mills have increased capacity; year-to-date capacity utilization as of early July 2019 was 81.2 percent, compared to 76.7 percent during the same period of 2018, according to the AISI.
To stop prices from falling further without decreasing capacity, US mills have recently announced price increases for certain products, but prices have yet to move strongly upward.