Executive Briefings

Trump's Plan to Slap Tariffs on Steel Imports Carries Economic and Political Risks

President Trump was standing on the banks of the Ohio River, and as barges loaded with West Virginia coal floated by, he noted that half the United States' steel is produced within 250 miles and told the crowd that soon "the steel folks are going to be very happy."

Trump's Plan to Slap Tariffs on Steel Imports Carries Economic and Political Risks

Within that same distance lies the bulk of the U.S. auto industry, which the president also has promised to protect. But carmakers are dreading what Trump apparently was alluding to: plans to impose significant punitive tariffs or quotas on steel imports.

Trump has promised to crack down on unfair foreign traders and restore the fortunes of American manufacturing. Few industries are as important as steelmaking, and Trump sees steel as an emblem of industrial power as well as being vital to the country’s national security.

But the president faces a conundrum: Making good on his Cincinnati pledge earlier this month may help domestic mills by restricting foreign steel and boosting U.S. steel prices. But that same action almost certainly will mean higher costs for American makers of cars, appliances, machinery and construction materials, and for many other manufacturers that cut, bend and otherwise fabricate steel. That could lead to higher prices for consumers and job losses.

“I’m sympathetic to American steel mills, but if they protect domestic steel, they’re going to be hurting steel fabricators, which employ a hundred times more people,” said Drew Greenblatt, chief executive of Baltimore-based Marlin Steel Wire Products, which buys only U.S.-made steel. Greenblatt has been paying more for the metal since Trump’s election, as prices have risen partly in anticipation of coming measures.

Others, such as Fontana-based California Steel Industries and the Port of Los Angeles, have voiced opposition to blanket restrictions on steel imports, saying the kinds of slab steel that are important for their businesses and employment are not readily available from domestic producers. Nor do analysts think tariffs will address the key problem — excess steel output in China that has caused a global glut and downward pressure on prices.

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Within that same distance lies the bulk of the U.S. auto industry, which the president also has promised to protect. But carmakers are dreading what Trump apparently was alluding to: plans to impose significant punitive tariffs or quotas on steel imports.

Trump has promised to crack down on unfair foreign traders and restore the fortunes of American manufacturing. Few industries are as important as steelmaking, and Trump sees steel as an emblem of industrial power as well as being vital to the country’s national security.

But the president faces a conundrum: Making good on his Cincinnati pledge earlier this month may help domestic mills by restricting foreign steel and boosting U.S. steel prices. But that same action almost certainly will mean higher costs for American makers of cars, appliances, machinery and construction materials, and for many other manufacturers that cut, bend and otherwise fabricate steel. That could lead to higher prices for consumers and job losses.

“I’m sympathetic to American steel mills, but if they protect domestic steel, they’re going to be hurting steel fabricators, which employ a hundred times more people,” said Drew Greenblatt, chief executive of Baltimore-based Marlin Steel Wire Products, which buys only U.S.-made steel. Greenblatt has been paying more for the metal since Trump’s election, as prices have risen partly in anticipation of coming measures.

Others, such as Fontana-based California Steel Industries and the Port of Los Angeles, have voiced opposition to blanket restrictions on steel imports, saying the kinds of slab steel that are important for their businesses and employment are not readily available from domestic producers. Nor do analysts think tariffs will address the key problem — excess steel output in China that has caused a global glut and downward pressure on prices.

Read Full Article

Trump's Plan to Slap Tariffs on Steel Imports Carries Economic and Political Risks