The Trump administration began an investigation of steel importsas U.S. Steel Corp. asked a trade agency to investigate its claimsthat rival Chinese manufacturers colluded to fix prices andundercut American competitors.

President Donald Trump signed a memorandum Thursday encouragingthe Commerce Department probe, which had already started and willexplore whether steel imports hinder national security undersection 232 of the Trade Expansion Act.

In an Oval Office ceremony, Trump declared the opening of theCommerce Department investigation ”a historic day for Americansteel and most importantly for American steel workers.”

Imports have risen “despite repeated Chinese claims that theywere going to reduce their steel capacity,” Commerce SecretaryWilbur Ross said in a briefing for reporters at the White House.“It's a very serious impact upon the domestic industry.”

Still, when a reporter asked Trump whether the investigationwould raise tensions with China as he seeks that country's help inslowing North Korea's nuclear and missile programs, Trump said thetrade investigation “has nothing to do with China” and addresses “aworldwide problem.”

The U.S. International Trade Commission in Washington heard U.S.Steel's argument also on Thursday that a separate antitrustcomplaint it filed against Chinese manufacturers should be revived.A trade judge in November had thrown out the claim, saying theagency didn't have the legal authority to hear the allegations.

From the beginning, the antitrust complaint has caught theattention of U.S. politicians, as members of Congress from bothparties wrote to the commission, asking it to hear the case infull. Questions about the future of the American steel industryhave became a hot political topic, with Trump signing a “BuyAmerica” order to buoy American steel producers by forcing projectssuch as U.S. pipelines to use steel made in the country.

Steelmakers in the Americas just capped their best collectivestock performance since 2003 following a raft of successful tradecases levying tariffs against foreign metal.

Matter of Jurisdiction

The key question before the commission is whether it hasjurisdiction over the antitrust complaint. U.S. Steel and otherAmerican steel producers have traditionally filed cases with thecommission under anti-dumping laws that bar sale of goods priced atless than fair value or that are subsidized by foreign governments.The remedy usually involves imposition of tariffs that raise theprices on foreign products.

The Commerce Department investigation is moving on a separatetrack. If the department finds evidence of a national securitythreat from steel imports, the president is authorized tounilaterally “adjust imports.” Only two presidents — Richard Nixonand Gerald Ford — have ever granted relief under Section 232,citing national security concerns stemming from the global oilcrisis of the 1970s.

Since then the U.S. has launched only two such investigations,and in each the Commerce Department's Bureau of Industry andSecurity declined to recommend action. Should Ross recommend actionafter the steel investigation, targeted countries would likely filea dispute with the World Trade Organization.

In an unusual move, U.S. Steel filed its complaint under astatute covering unfair trade practices, which most often isused to protect domestic companies from patent infringement andtheft of intellectual property. Under this provision, thecommission could block carbon and alloy steel produced in Chinafrom entering the U.S.

The case, however, has been an uphill slog for U.S. Steel.

The complaint filed in April 2016 made three allegations.One was theft of trade secrets in connection with JusticeDepartment allegations that Chinese officials hacked thePittsburgh-based steel company. A second involved claims theChinese companies were rerouting their products through othercountries to hide the country of origin. The third, which is theone U.S. Steel is seeking to revive Thursday,involves antitrust violations that the companies improperlyconspired to fix prices and control export volume.

In February, U.S. Steel dropped the trade secrets claim relatedto hacking, citing “the inequities of the statutes that wereenacted before the dawn of the internet age and the substantialthreats posed by cyber espionage.”

'Total Blockade'

Baoshan Iron & Steel Co., China's second-largest steelmaker,accused its American competitor of seeking an unprecedented “totalblockade of steel trade from an entire country.” The company, alongwith other Chinese steelmakers, argue the case should go throughnormal trade complaint channels, which American steel companieshave used extensively.

“Imports from China have dropped to a trickle” because of U.S.Steel's aggressive use of anti-dumping regulations,” Sturgis Sobinof the Covington firm, representing the Chinese manufacturers, toldthe commission Thursday. He said U.S. Steel is instead asking thecommission to “make up your own set of antitrust laws” to block allimports.

U.S. Steel has the backing of the nation's largest steel unionand AK Steel Holding Corp.

Members of Congress have also sided with U.S. Steel. The30-member Congressional Steel Caucus sent a letter saying “weassure you we will be carefully watching the progress of thiscase,” while a bipartisan letter from 47 members of Congress saidthey “strongly urge” the commission “to ensure that U.S. Steel ispermitted to present its case in full.”

The Commerce Department investigation comes less than two weeksafter U.S.-Sino trade tensions boiled over at an April 6 meeting ofthe WTO goods council in Geneva.

At the meeting, the U.S. delegation said its fight over China'sindustrial overcapacity problems had “culminated to a criticalpoint” and WTO members have “no choice” but to bolster their tradedefenses against China.

The U.S. and other WTO members, including the EU, Canada andJapan, have long criticized Beijing's domestic steel subsidies,which they said have led to massive overcapacity in globalmarkets.

Despite China's pledge to reduce the country's annual steelcapacity by as much as 150 million tons before 2020, the countryremains the world's largest steel producer and accounts for almosthalf of the globe's total steel production. Beijing counters thatits subsidies adhere to WTO rules and the growing overcapacity insteel markets is a global problem that must be solved in acollaborative effort in forums like the Organization for EconomicCooperation and Development and Group of 20 major economies.

U.S. Steel's complaint is In the Matter of Certain Carbon andAlloy Steel Products, 337-1002, U.S. International Trade Commission(Washington).

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