WASHINGTON -- The U.S. Commerce Department announced it has launched a national security investigation under Section 232 that could lead to new U.S. tariffs on imports of key electrical steel components of power transformers and related goods.

The investigation will look into whether laminations for stacked cores and wound cores for incorporation into power transformers and transformer regulators are being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security. 

The investigation is partially aimed at protecting the last U.S. manufacturer of grain-oriented electrical steel, AK Steel, recently acquired by Cleveland-Cliffs, which has argued for tariff relief, reports Financial Post.

"An assured domestic supply of these products enables the United States to respond to large power disruptions affecting civilian populations, critical infrastructure and U.S. defense industrial production capabilities," Commerce said in a statement.

Cleveland-Cliffs Chief Executive Lourenco Goncalves warned U.S. lawmakers in March that he would be forced to close two AK Steel plants that produce electrical steel with a loss of 1,600 jobs without better protection from imports.

Although the Commerce Department in 2018 imposed 25% tariffs on most steel imports, these did not include partially processed "downstream" components, such as the steel laminations and cores that are installed into transformers and controllers in U.S. plants.

Imports of such components from Mexico and Canada using Chinese-made electrical steel have greatly increased in the past two years, keeping the AK plants in Butler, Pennsylvania and Zanesville, Ohio unprofitable, Goncalves said.

Source: Press Release; Financial Post