Steel Modernization Act - 118th Congress (H.R.9334)

The principle goal of the Steel Modernization Act is to revitalize deindustrialized towns by reshoring iron and steel manufacturing and protecting and promoting existing domestic plants. As part of this bill, the International Trade Commission is directed to conduct a study on the greenhouse gas emissions of domestically produced and imported iron and steel products and their finished goods, as well as recommend tariff rates for imports that exceed the U.S. average for carbon intensity. The bill gives the President discretion to impose the recommended tariff rates or different tariff rates as determined.

Bill explainer

The Steel Modernization Act is a comprehensive bill that aims to reshore iron and steel manufacturing and bolster existing facilities to rebuild the domestic manufacturing base to the benefit of regions hit hardest by the last few decades of deindustrialization. Analyzing the greenhouse gas emissions of domestic and foreign iron and steel products and imposing tariffs on high-emitting iron and steel imports are just one component of this strategy.

The U.S. International Trade Commission (ITC) would be charged with developing a report on the average emissions intensity of domestic iron and steel production, iron and steel products, and the finished goods that utilize them. The ITC would also conduct a parallel study on the emissions intensity of iron and steel products in foreign countries from whom the U.S. has recently imported at least $200 million of such products. For the latter study, the ITC would assess the emissions data of foreign iron and steel industries, if enough information is available. If industry-specific information is not available, the ITC may assess the economy-wide emissions intensity of that country.

The ITC must recommend a tariff rate on those foreign-produced iron and steel goods that have a greater emissions intensity than the U.S. The rate of the carbon tariff for finished products would be calculated by taking the sum of each of the rates of all of its covered components; this would be doubled for products coming from non-market economies. The President may impose the recommended tariff rates or a different tariff rate as deemed necessary to carry out the purposes of the bill.

If a product is melted or poured in a third country, the tariff would be based on the emissions intensity of that country unless the President has approved a petition to use the intensity of the exporting country. Importers would also be able to petition the President to set the tariff based on the emissions intensity of a product’s manufacturer, rather than of the exporting country.

Import tariffs would take effect within 90 days of the publication of the ITC’s report, while tariffs on finished goods using iron and steel would take effect on January 1, 2027. 75 percent of the tariff revenue would go to the Department of Energy, and the other 25 percent would go toward funding climate, clean energy, and decarbonization programs in foreign countries.

The President can issue a “carbon clubs waiver” to exempt covered products coming from countries that have similar iron and steel carbon-pricing policies as those in this bill, or if the country’s emissions intensity does not exceed 150 percent of that of the U.S. Least developed countries would also be exempt from the tariff unless they supply at least 3 percent of global exports of a given covered product. Products can also receive exemptions if there are no similar products manufactured in the U.S.