Global excess steel production capacity is undermining market discipline – AISI

Global excess capacity undermines market discipline and creates significant obstacles for U.S. steelmakers, who, among other things, are seeking to invest in new and modernized facilities. This is stated in comments from the American Iron and Steel Institute (AISI) in response to a request from the Office of the U.S. Trade Representative (USTR).

The request concerns the initiation of Section 301 investigations into the actions, policies, and practices of certain economies related to structural overcapacity and production.

As noted, the current problem of excess capacity and overproduction is often caused by foreign government subsidies and other trade-distorting policies and practices.

AISI believes that the ongoing actions of numerous foreign governments require the continued aggressive application of Section 232 steel tariffs and additional measures resulting from the current Section 301 investigations. It is noted that the actions taken by the current U.S. administration in this context regarding steel and other industrial goods, as well as regarding China, have helped reduce the flow of steel imports into the U.S., providing the domestic steel industry with room for growth and investment.

AISI cites data from the Steel Committee of the Organization for Economic Cooperation and Development (OECD), according to which global excess capacity rose to 640 million tons in 2025.

The American Iron and Steel Institute also notes that exports linked to excess capacity continue, despite a near-record number of new cases involving trade remedies. In addition, exporters continue to develop new and increasingly sophisticated methods to circumvent steel tariffs, including through minor product modifications, investing in steel mills abroad to change the country of origin, and shipments in the form of steel-intensive processed products.

Overproduction and related exports undermine innovation and profitability in market economies. Market-based economies have attempted to address the problem individually and collectively. As noted in AISI’s comments, “these well-intentioned but inadequate measures” to safeguard trade have provoked dumping and tariff circumvention.

The American Iron and Steel Institute has called on the USTR to take decisive action to compel countries with non-market excess capacity to eliminate discriminatory trade practices, as well as to assess its “worst offenders.” The Office of the U.S. Trade Representative is also urged to consider additional appropriate measures, including cumulative tariffs.

As a reminder, the U.S. has adjusted tariffs on steel, aluminum, and related products to simplify compliance procedures and prevent the undervaluation of imports.