U.S. Opens Inquiry Into Uranium Imports in Sign That Trade War Is Spreading

WASHINGTON — The Trump administration said Wednesday that it was starting an investigation into uranium imports, potentially opening another front in an expansive trade war that has shaken alliances with countries around the world.

Commerce Secretary Wilbur Ross said the department would investigate whether imported uranium ore and related products — key ingredients in the U.S. nuclear arsenal, and used in power production and nuclear submarines and aircraft carriers — threatened national security.

Uranium produced domestically now fills only 5 percent of U.S. needs, Ross said, down from half in 1987.

The uranium inquiry is the latest of several trade-related steps the Trump administration has taken with an eye toward imposing stiff tariffs on imports. Levies have already been placed on washing machines, solar-power products, steel and aluminum from overseas, and on an array of Chinese goods. The administration is also considering whether to impose tariffs on imported cars and car parts.

The investigation announced Wednesday was requested by two U.S. uranium mining companies, Ur-Energy and Energy Fuels. The firms say low-priced imports, especially those from competitors supported by foreign government subsidies, had caused them to slash jobs in recent years. Nuclear power producers have responded by warning that sharp restrictions on uranium imports could lead to the closure of plants.

The uranium imported into the United States now comes mostly from Australia, Canada, Kazakhstan and Russia.

“If we did not take this action, this industry would become extinct,” said Jeffrey T. Klenda, the chief executive of Ur-Energy. “And if we allow it to die, resurrecting it will be monumentally expensive. We cannot leave the fuel cycle in the hands of Vladimir Putin and his confederates, and increasingly the Chinese.”

Klenda said that uranium producers in the United States, as well those in allied countries like Canada and Australia, were suffering, while state-subsidized companies in Kazakhstan have rapidly gained global market share.

Shares of Ur-Energy and Energy Fuels both rose Wednesday.

But the nuclear power industry has warned that an aggressive attempt to restrict access to imported uranium could increase the cost of operating U.S. nuclear power plants, many of which already struggle to compete with lower-price natural gas and renewable energy.

Nuclear power provides 20 percent of the United States’ electricity, a fraction that is set to wane in the coming years: Since 2013, six of the nation’s nuclear reactors have shut down permanently and 11 others are scheduled to be retired by 2025.

President Donald Trump, who often talks about the benefits of nuclear power, has ordered Energy Secretary Rick Perry to “prepare immediate steps” to stem the closure of reactors. But new trade barriers on nuclear fuel could further strain the industry.

“Maintaining all the elements of the domestic uranium fuel supply is in our national interest and we urge the federal government to take appropriate action, without harming the fleet of nuclear reactors,” Maria G. Korsnick, head of the Nuclear Energy Institute, said in a statement.

The companies that requested the trade case asked that the Commerce Department limit imports so that 25 percent of the uranium used in the United States would be produced domestically. The companies argue that doing so would pose minimal burdens on nuclear power plants.

The companies that operate the plants dispute that idea,pointing to a recent study from NorthBridge Group, a consulting firm, that looked at the impact of such a quota, which would require domestic producers to expand their operations sharply in just a few years. Doing so would cost the nuclear power industry $500 million to $800 million per year, the study found, increasing the average cost of electricity from nuclear reactors by around 2-3 percent.

“We sympathize with the plight of uranium suppliers,” Korsnick said Wednesday. “However, NEI does not support the implementation of quotas as described in the petition. Potential remedies could put even more generating units at risk for premature closure.”

It is unclear what the Trump administration will ultimately propose with regard to imported uranium. If it determines that unfair trade practices are hurting domestic mining companies, the Commerce Department can recommend a broad range of remedies, from strict quotas to temporary tariffs. Such a decision would be expected to play out over several months as the department continues its investigation and holds public hearings. The investigation into uranium imports — as with those involving steel, aluminum cars and car parts — is being conducted under Section 232 of the Trade Expansion Act of 1962, a legal provision that gives the president broad power to impose tariffs on imports that he determines pose a threat to national security.

The use of a national security-related law to place tariffs on close military allies like Canada and the European Union has been a source of contention. Multiple countries have retaliated by imposing tariffs on U.S. goods and have challenged the Trump administration’s measures at the World Trade Organization.

In particular, trade experts say that the administration’s imposition of tariffs for national security reasons — a matter the World Trade Organization does not closely regulate — opens a potential loophole that other countries could use to put their own levies on a range of products.

“If the U.S. has rewritten the rules of the WTO system to say you can do anything you want if it’s in your national security interests, be prepared for every country in the world to come up with a new definition of what is its critical national security interest,” Rufus Yerxa, president of the National Foreign Trade Council, which represents exporters in the United States, said.

Congress has considered taking action to stay the administration’s use of the national security provision to impose tariffs. Republican leaders have shown limited support for such a move so far, but that could change as the administration’s trade measures become more far-reaching.

“If the administration continues forward with its misguided and reckless reliance on tariffs, I will work to advance trade legislation to curtail presidential trade authority,” Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee, said Tuesday. “I am discussing legislative options with colleagues both on and off the Finance Committee and I will continue to do so.”