Shipments of steel products by American manufacturers will decline by 5 percent next year because of a slowdown in economic growth, the Commerce Department forecast yesterday.

A major cause of the anticipated steel decline will be an overall weakness in automobile sales and consumer preferences for smaller cars, both of which mean reduced demand by the auto industry for steel.

Separately, industry giant U.S. Steel Corp. confirmed that it has canceled a planned 3.4 percent increase in sheet and strip products, which are used extensively in the auto industry.

A company spokesman offered no explanation for elimination of the price boost, set for Jan. 1. Several other major steel firms, including Bethlehem Steel Corp., Republic Steel Corp. and Jones & Laughlin Steel Corp., have scheduled price increases for Jan. 1 but not for sheet and strip products. Industry sources said U.S. Steel's action was necessary to remain competitive.

On Capitol Hill, meanwhile, a U.S. Steel official told members of a House subcommittee that laws against alleged "dumping" of foreign-produced steel in this country, at subsidized prices, need to be enforced more aggressively.

Albert Monnett Jr., the U.S. Steel spokesman, claimed that excessive steel imports helped force his company to announce plans for permanent shutdowns at 16 plants. An economist at the Brookings Institution and a spokesman for the White House Council on Wage and Price Stability disputed the executive's assertion, however.

"Excessive and unfairly priced imports are a major contributor to the involuntary liquidation of the American steel industry," Monnett told the commerce, consumer and monetary affairs subcommittee.

Brookings economist Robert Crandall said "small and inefficient" steel plants cannot be saved and that the industry must continue to close similar operations. Roger Alcaly, a COWPS economist, said the U.S. Steel plant closings were "likely to occur even with trade protection."

The Commerce Department report, part of an annual industrial forecast scheduled for publication next month, said shipments next year should total about 95 million tons compared with an estimated 100 million tons in 1979 -- up 2 percent from 1978 and the best performance by the domestic industry since 1974.

In addition to a decline in auto industry needs, the report said the construction, appliance and container industries will need less steel.

The government report also projected:

Steel industry employment will decline 3.8 percent in 1980 to 434,000 jobs following a 0.4 percent increase to 451,000 jobs this year.

Raw steel production will decline 3.7 percent to about 130 million tons after a 2 percent decline to 135 million tons in 1979.

Steel imports will decline 6.2 percent to about 15 million tons, after a 24 percent decline to 16 million tons in 1979.

By 1984, domestic steel shipments should be up 8 percent from 1979 to about 108 million tons, below the peak year of 111.4 million tons in 1973. The 1984 shipments should include 2.5 million tons of exports, Commerce stated.