Nucor Cheered Forced Labor Tariffs, but Its Own Supply Chain Tells a Different Story
Clark Packard and Alfredo Carrillo Obregon
Two months ago, when the Office of the United States Trade Representative (USTR) imposed new Section 301 tariffs on 60 economies for failing to ban imports made with forced labor, the agency followed up with a press release highlighting praise from certain American firms, advocacy organizations, and trade associations—including Big Steel. Among those quoted was Nucor Steel’s chair and CEO Leon Topalian, who said that the steel company “has long supported strong trade enforcement to level the playing field for American manufacturers in the face of global overcapacity and unfair trade.” He added that USTR’s actions “target areas where American manufacturers have been harmed while preserving critical supply chains.” Nucor’s definition of unfair trade driven by forced labor must not include the conditions at one of its Brazilian suppliers, detailed earlier this week by Bloomberg.
On September 23, Bloomberg published a story under the headline, “Nucor Supply Chain Tainted by Evidence of Modern-Day Slavery.” According to Bloomberg’s review of nonpublic Brazilian government records covering four worksite raids since mid-2022, six Nucor pig iron suppliers were cited for buying charcoal from camps where authorities alleged workers were living in conditions of modern-day slavery. One of them, Carajas Siderurgia, was accused of directly exposing workers to those conditions. Nucor’s raw materials subsidiary imported at least 18 shipments from the six suppliers over the past three years (about five percent of its average annual pig iron purchases), and some of the cited producers kept supplying Nucor as recently as April, while USTR was doing its largely performative investigations into forced labor, as discussed below.
This is not new ground for Nucor. In 2006, Bloomberg Markets reported similar allegations in Nucor’s Brazilian supply chain. Dan DiMicco, then Nucor’s CEO and later a prominent trade adviser to the Trump presidential campaigns, promised to investigate the allegations and, if verified, not buy from the producers until the matters were solved and the companies were in compliance with Brazilian law. (DiMicco is now vice chairman of the Coalition for a Prosperous America, another domestic steel-aligned advocacy organization cheering the forced labor tariffs.)
In 2010, after a three-year pressure campaign from shareholder Domini Social Investments, Nucor agreed to require its top-tier Brazilian pig iron suppliers to join the Citizens Charcoal Institute or sign Brazil’s National Pact for the Eradication of Slave Labor and to publish annual progress reports. Nucor maintains a written forced labor policy with versions dating back to at least 2015, which supposedly screens charcoal producers against Brazil’s “dirty list” of labor violators. The paperwork exists. Bloomberg’s reporting suggests the problem does, too.
Nucor was happy to applaud tariffs on 60 economies in the name of forced labor. Twenty years after the company’s promise, a more useful contribution would have been a public, detailed explanation of how pig iron from the cited suppliers continued to move through its supply chain.
Bloomberg noted some caveats. Brazil’s legal definition of modern slavery is broader than the United Nations’ and covers degrading conditions and exhausting schedules even where, as at the Carajas camp, workers were paid and free to leave. (Notwithstanding this discrepancy, the US Department of Labor previously flagged Brazilian charcoal as a good made with forced labor in a 2024 report that is repeatedly mentioned in USTR’s “forced labor” Section 301 report.) Nucor told Bloomberg it has “not identified any evidence that our direct pig iron suppliers knowingly engaged in forced labor.” Nothing in Bloomberg’s reporting shows that Nucor knowingly bought tainted pig iron.
Still, this is a useful window into the political economy of steel protectionism, and it comes with some noteworthy ironies.
First, a company that routinely petitions Washington for protection from imports depends on imported inputs—just as American manufacturers rely on imported steel. Nucor received more than 2 million gross tons of pig iron last year, most of it from overseas, according to Bloomberg. Nucor was also among the petitioners in 2024 antidumping and countervailing duties cases against corrosion-resistant steel from Brazil and nine other trading partners. Nucor is also a member of the Rebar Trade Action Coalition, which testified in favor of the forced labor tariffs and urged them to apply to steel already subject to Section 232 “national security” tariffs. In other words, Brazilian finished steel is an unfair trade threat, while Brazilian pig iron is a crucial input.
When the Trump administration imposed its 12.5 percent Section 301 forced-labor tariffs on Brazil in July, it exempted pig iron. The request came from the Steel Manufacturers Association (SMA), which includes Nucor. At USTR’s July hearing, SMA chairman Barry Schneider, who is also executive vice president of Steel Dynamics—another company that, per Bloomberg, has received shipments of tainted pig iron from Brazil—argued that “Brazil supplies more than 60 percent of America’s pig iron, and other countries cannot replace those volumes.” That is presumably what Topalian meant by “preserving critical supply chains.”
SMA, for its part, is quoted in the same USTR press release insisting that America should never “ask our workers to compete against forced labor.” Remember this the next time Nucor casts itself as a victim of unfair trade. Steel-consuming manufacturers downstream of Nucor would love the same arrangement.
The pig iron exemption isn’t a quirk of the Nucor story but rather a window into what the forced-labor tariffs were actually designed to do. As my Cato colleague Scott Lincicome detailed in July, the forced labor tariffs were never really about forced labor. Forced labor was simply the pretext for more tariffs. The Trump administration pivoted to forced labor and Section 301 after the United States Supreme Court struck down the president’s tariffs under the International Emergency Economic Powers Act (IEEPA). The IEEPA tariffs quickly gave way to balance-of-payments tariffs under Section 122 of the Trade Act of 1974, which only made sense in a world of fixed exchange rates. The Court of International Trade ruled those temporary tariffs illegal earlier this summer. As all this was going on, USTR sought a rationale to maintain an aggressive tariff regime.
The USTR report gave each targeted country about half a page of analysis, and its rough estimate of a tariff actually calibrated to offset forced labor’s competitive distortion came in at under 1 percent, against the 10 to 12.5 percent rates USTR imposed. There was no off-ramp, either: a country could adopt the United States’ forced-labor framework wholesale and still face tariffs.
A USTR supposedly laser-focused on protecting vulnerable workers abroad to prevent American workers from being undercut would at least investigate imports of the tainted pig iron described in the Bloomberg report under this authority. But given the real purpose for these tariffs, and the fact that Big Steel is at the receiving end of those shipments, we doubt this will happen.
Forced labor, meanwhile, is a real and complicated problem. As Lincicome noted in July, Walk Free, a human rights advocacy group, estimates that about 28 million people were in some form of forced labor in 2023. Unlike USTR’s hasty, unserious report, Bloomberg’s reporting shows what serious scrutiny looks like: inspectors, documents, trade records, and named suppliers. The United States has a tool on the books: Section 307 of the Tariff Act of 1930 lets Customs detain specific shipments made with forced labor. It targets goods, not entire economies, and it does not double as a revenue measure. A similar law bans the importation of goods produced by certain entities in China’s Xinjiang Uyghur Autonomous Region. The adequacy of these laws and their enforcement for addressing this global problem has been disputed by policymakers and scholars.
Assuming the government needs additional, unilateral tools to combat and root out this vile practice, those tools should not be malleable enough to be used for protectionist ends—exempting imports recently linked to forced labor that are imported by politically connected industries while also imposing tariffs on imports that those industries compete against.