Just four days after he took office, Pr*sident Donald Trump fulfilled one of his campaign promises by issuing a memorandum calling for a Commerce Department study on making all-new, retrofitted, repaired, or expanded U.S. pipelines to be built with American steel. The problem for Trump is that it’s likely no way can be found to craft a domestic-steel-only policy that’s legal. And even if that obstacle could be overcome, a majority of Congress opposes the idea.
The White House soon exempted the Keystone XL pipeline because it is underway, with much of the pipe already stacked ready for installation. According to KXL builder TransCanada, about half the pipeline’s steel will come from abroad, half from a plant in Arkansas.
Trump is used to breaking promises, of course. And his vow in this matter has all along had nothing to do with invigorating the U.S. steel industry but in getting more pipelines built. Standard fakery.
This time, he has the World Trade Organization to give him an excuse for reneging. The WTO allows domestic content rules for government projects. But for the Trump Regime to impose such a requirement on private projects would be illegal unless it can persuade the WTO the domestic content mandate is being imposed for national security reasons. A tough sell.
Exempting one pipeline definitely isn’t enough for the industry. Pipeline companies and the American Petroleum Institute are fighting the plan. They claim that requiring that only domestic steel be used “would run counter to the Trump administration’s goal of expanding U.S. energy production and infrastructure,” according to a letter to the Commerce Department by several groups, including the Association of Oil Pipe Lines and the American Petroleum Institute.
The requirement would, they also claim, kill jobs, the standard rap for the past 80 years or so when any new regulation is proposed.
The companies argue that U.S. steelmakers do not manufacture some of the parts they need to build their projects and that requiring them to buy American-made steel could prove too expensive. “Does the domestic industry have the ability to quickly come in and replicate that capability? The answer is: not easily, or not quickly,” says John Mothersole, an analyst at IHS Global Insight.