October 2024 Legal Action

Legal Action Taken

On October 21, 2024, Zekelman filed three separate legal actions:

Lawsuit in U.S. District Court for the District of Columbia against the Republic of Mexico for violating trade agreements and dumping steel on the U.S. market. The lawsuit alleges that Mexico’s conduct threatens the national security of the United States by damaging domestic steel producers.

Section 232 Petition with the U.S. Office of Homeland Security to compel Secretary Alejandro Mayorkas to use the Office of Trade Relations to enforce trade agreements between the U.S. and Mexico.

Petition for Determination of Discrimination in the Commonwealth Court of Pennsylvania stating that Mexico is discriminating steel conduit made in Pennsylvania and violating the Pennsylvania Trade Practices Act (PTPA) in 1968.

3 Reasons for Legal Action

Mexico is flagrantly ignoring its commitments to trade agreements, endangering and eliminating U.S. jobs. They are dumping record amounts of steel on the U.S. market.

• Mexico is dumping steel on the U.S. market and damaging domestic steel producers. Mexico’s violation of trade agreements has caused domestic steelmakers to scale back expansion plans, delaying hundreds of millions of dollars in investments in new plants and upgrades at existing facilities. Zekelman Industries was forced to close plants in Long Beach, California and Chicago, Illinois, resulting in more than 400 American workers losing their jobs.
• Steel imports from Mexico rose in 2022 to 72% above the benchmark historical average set between 2015-2017.
• A 2019 agreement lifted tariffs on Mexican steel put in place by the Trump Administration. Mexico near immediately began violating the agreement.

The U.S. Government has a duty to act, and it is not taking the necessary steps. Mexico is exploiting this inaction and appears to also be facilitating China and India in avoiding tariffs.

• U.S. Office of Homeland Security Secretary Alejandro Mayorkas has the power to use the Office of Trade Relations to enforce trade agreements between the U.S. and Mexico. He is failing to act even though Mexico’s violation of those agreements is evident.
• Some in Congress recognize the threat that Mexico’s actions have caused. U.S. Senators Tom Cotton (R-TX) and Sherrod Brown (D-OH) have introduced bipartisan legislation seeking to reinstate the 25% steel tariff until Mexico complies with the 2019 Agreement.
• According to the Center for a Prosperous America, it appears that it is not just Mexican steel being shipped into the United States. Though domestic demand in Mexico for steel and iron imports has risen by only 13% from 2015 to 2023, actual steel and iron imports into Mexico rose by over 80%. Much of that steel and iron is coming from China and India, with imports from those two countries doubling in that timespan. This happened at roughly the same time that U.S. steel imports from Mexico surged. There may be a high level of masked Chinese and Indian steel making its way through Mexico to avoid steel duties.

The steel industry is vital to national security and key industries that range from energy to transportation and construction. This situation goes beyond the typical fairness argument around government subsidies for imported goods. Mexico is harming an industry vital to our national defense and the health of local economies across the country.

• A healthy U.S. steel industry is critical to supplying the U.S. military and meeting the need for steel generated by the Infrastructure Investment and Jobs Act. The iron and steel industry is a dynamic part of the U.S. economy, supporting nearly 2 million jobs in 2017. Dumping of steel by Mexico threatens $520 billion in total economic output in the U.S.
• Domestic steel is critical to many important industries, from transportation and defense to energy and construction. Without a healthy domestic steel industry, the entire U.S. economy is at risk.
• Steel plants are the lifeblood of many American communities, providing good paying jobs and contributing to the local tax base. When a domestic steel producer cannot expand – or must close a facility – because of unfair competition from Mexico, it has a devastating effect on every aspect of that community.

Mexico’s Agreement Breach – Data Details

The trend of surging steel conduit imports from Mexico manifests when looking at total import volume in addition to total value. Current steel conduit import volume from Mexico is 303% above the baseline average from 2015-2017 (over 3 times as high).

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Mexico Likely Funneling Tarriff-Free Steel from China and India

A dramatic increase in Mexico’s own steel imports suggests that Mexico is permitting other foreign producers to benefit from its preferential trade status. Though domestic demand in Mexico for steel and iron imports rose by only 13% from 2015 to 2023, actual steel and iron imports into Mexico rose by over 80%. Much of this increase is due to steel and iron imports from China and India.

Indeed, Mexican imports from China and India have doubled in that same timespan, as the graph below indicates. The values represented clearly show that Mexican steel and iron imports from China and India grew dramatically in 2021, roughly the same time that U.S. steel imports from Mexico surged. This correlation suggests that there may be a high level of disguised Chinese and Indian steel surging through Mexico to avoid Section 232 tariffs. [Source: Andrew Rechenberg, Mexico’s Violation of Steel Import Agreement is Threatening Local U.S. Economies, Coalition for a Prosperous America (Apr. 15, 2024)]

Mexican Steel & Iron Imports from China & India (2012-2023)

Steel Employment in the USA

The domestic steel industry has served as the backbone of local American communities and economies for generations. This remains true today. According to the U.S. Bureau of Labor Statistics, U.S. employment in steel mill and steel product manufacturing totaled 144,500 in 2023. Based on average annual wages, these jobs paid over $9 billion in wages and benefits. The Economic Policy Institute (“EPI”) estimates these steel industry jobs support over 1 million additional supplier and distribution jobs and 523,000 induced private and public sector jobs.

Table includes data from the U.S. Bureau of Labor Statistics and EPI. U.S. Bureau of Labor Statistics, Employment for Manufacturing: Iron and Steel Mills and Ferroalloy Production (NAICS 3311) in the United States (hereinafter “Mill Employment Data”)

Steel Conduit is Essential to Security and Infrastructure

Conduit is a steel-based, tubular enclosure for electrical wiring and other cables. Conduit shields wires, cables, and sensitive equipment from physical damage, electromagnetic interference, and environmental hazards. Conduit also provides a clear and accessible pathway for making repairs and rerouting cables, ensuring efficient maintenance and promoting uninterrupted connectivity. For these reasons, conduit has served as a durable and cost effective “raceway” for wiring and cables in commercial buildings, mission critical military and space centers, power plants, and transportation systems for over 100 years.

America’s need for domestic steel conduit to meet these critical infrastructure needs has only increased since 2018. In addition to its Buy America provisions, the Bipartisan Infrastructure Law (“BIL”) and Jobs Act signed on November 15, 2021 by President Biden authorized a $550 billion investment in American infrastructure. The BIL included an initiative to establish a network of electric vehicle charging stations across the country, most of which will require steel conduit. The future of these infrastructure projects and many others rest on a strong domestic steel and steel conduit industry.

Lastly, steel conduit is a vital component in nearly all sixteen designated critical infrastructure sectors identified by the 2013 President Policy Directive 21, which Commerce recently relied on to determine that steel itself is essential for national security applications:

• Chemical Production: Manufactured chemicals, as well as steam and water byproducts, create highly corrosive environments that can harm cable systems within the processing plant. Conduit protects wiring and cables from this corrosion in chemical processing facilities.
• Commercial Facilities: Steel conduit is one of the most common electrical raceways used in commercial buildings. Conduit’s longevity and adaptability make it easy to update and reuse as buildings change over time. Moreover, while the National Electric Code places rigorous restrictions on other materials, steel conduit is universally approved for electrical raceway use in commercial buildings.
• Communications: Conduit plays a critical role in maintaining the integrity of communications networks and ensuring the seamless flow of information in today’s interconnected world. Most importantly, conduit protects communications cables from physical damage and signal interference, ensuring reliable and high-quality communications.
• Defense Industrial Base: Conduit provides military wired and fiber optic systems with secure, explosion-proof, and weather-proof protection. Moreover, conduit’s light weight and durability make it a particularly well-suited raceway for aerospace applications.
• Energy: Conduit’s primary role is to protect uninterrupted access to electrical energy sources throughout various critical infrastructure sectors.
• Financial Services: Conduit’s resistance to electromagnetic interference makes it particularly suited for use in the financial services industry, where security of wired transmissions is particularly important.
• Food and Agriculture: Modern industrial food processing involves miles of electrical wiring that must be protected by conduit. When coated with a liquid-tight, antimicrobial jacket, steel conduit can both protect necessary wiring and inhibit bacterial growth, a consideration unique to the food processing industry.
• Government Facilities: The same benefits of using conduit in commercial facilities apply to government facilities. Moreover, conduit’s resistance to electromagnetic interference makes it particularly suited for use in government facilities, where security of wired transmissions is particularly important.
• Health Care/Public Health: In healthcare environments, it is critical that life-saving machinery is protected from catastrophic interference. However, some health care equipment can emit strong interference signals that can cause harm to other machinery. Steel conduit plays a critical role in ensuring uninterrupted access to life-saving healthcare equipment.
• Information Technology: Today’s world is increasingly run through data centers. Redundancy and resiliency are key principals of data center design, and steel conduit plays a key role in these objectives. Conduit shields wiring and cables from physical damage, electromagnetic interference, and environmental hazards. Conduit also provides separate pathways for primary and backup power feeds to ensure uninterrupted data connectivity.
• Nuclear Reactors, Materials, and Waste: Steel conduit’s resistance to extreme temperatures and overall durability, in addition to its ability to be coated in a radiation resistant jacket, make it particularly well-suited for use in nuclear facilities.
• Transportation Systems: For decades, steel conduit has been used in trains and subway systems, airplanes and airports, and bridges and tunnels. Further, as transportation becomes increasingly electrified, the importance of steel conduit to route and protect facilities such as electric vehicle charging stations will only increase.