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Ohio-based AK Steel Corp. bought this Dearborn steel plant in two thousand fourteen from Russian steelmaker OAO Severstal.

WASHINGTON — Domestic automakers and suppliers are bracing for a possible Trump administration decision to impose steep tariffs on imported steel and aluminum predicated on national security reasons, leading to higher costs and lost sales to foreign competitors.

Automakers are worried about the unintended consequences of any limitations on steel, including a potential decline in domestic auto production and the risk of triggering a global trade war. Retaliation by other countries would make access to raw materials and export markets even more difficult.

“Uncertainty is what’s problematic for the industry, and the most likely outcome for any remedy proposed is higher prices,” said Kristin Dziczek, director of industry, labor and economics at the Center for Automotive Research in Ann Arbor.

While most automotive steel is sourced from mills in the U.S., many specialty grades come from overseas.

President Donald Trump on April twenty ordered the Commerce Department to investigate the effects of global overcapacity in steel and aluminum, dumping, illegal subsidies and other factors on U.S. economic security and military preparedness. Steel and specialty alloys are strenuously used for armor, vehicles, ships, aircraft and infrastructure.

Cheap steel and aluminum have flooded the global market in latest years, leading to artificially low prices, a problem the White House and many experts blame on China propping up too many state-owned steel producers. Low profits prevent U.S. steel and aluminum producers from investing in development of higher-grade metals and from retaining a skilled work force, they say.

Eight U.S.-based smelters have either closed or curbed production since 2015, the Commerce Department says.

The U.S. is the world’s largest steel importer, buying 30.1 million metric tons of steel in 2016, almost a fifth of all steel imported globally, according to the U.S. International Trade Administration. The top import sources are Canada, Brazil and South Korea.

The U.S. doesn’t have steel tariffs, but punitive duties already are in effect in one hundred thirteen cases in which companies dumped steel at prices below fair-market value or illegally received state subsidies, with thirteen more cases pending.

Security clause

The Trump administration review, however, is being taken under Section two hundred thirty two of the Trade Expansion Act of 1962, which gives the president broad power to adjust imports if excessive imports are found to be a threat to national security. Remedies taken under the national security exception would make it difficult for other countries to successfully bring a complaint to the World Trade Organization.

Washington policy circles are abuzz with talk of an imminent decision, but trade analysts caution against attempting to forecast the timing, or outcome, of any announcement given the mixed signals coming from the administration on a number of fronts.

The Commerce Department has two hundred seventy days to present its findings and recommendations to Trump, who has another ninety days to determine on a course of activity. A closure of the investigation as early as this month would raise questions about whether the outcome was predetermined. Commerce Secretary Wilbur Ross is among an internal circle of advisers who have espoused protectionist policies in trade matters.

The Trump administration has broad power to adjust steel imports if excessive imports are found to be a threat to national security.

The administration’s range of potential deeds includes quotas. Ross has publicly speculated that imports could be capped at current levels, above which tariffs would kick in. The influence on automakers under such a script, Dziczek said, would be minimal because U.S. auto production has already peaked.

But industry representatives say any blanket tariffs or other confinements on steel imports would only widen the existing price gap in steel compared with other markets.

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