Wall fight gives Trump another way to boost steel

President Donald Trump loves steel, and steel loves him back.While American businesses from giants li...

Posted: Jan 10, 2019 5:46 PM
Updated: Jan 10, 2019 5:46 PM

President Donald Trump loves steel, and steel loves him back.

While American businesses from giants like Apple to small craft beer producers are suffering from the effects of Trump's trade war with China and the ongoing government shutdown, US steel producers are riding high on administration policies.

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American producers got a boost from the 25% tariff that Trump imposed on foreign steel in March. Demand rose as imports fell, allowing US companies to raise prices and increase hiring. The industry has added about 11,700 jobs since Trump took office.

That resulted in bigger profits for US producers like Nucor, which just this week announced that it would invest nearly $1.4 billion to open a new mill in the Midwest.

"The tariffs helped and the economy was strong. Those two things together made for a better year," said American Iron and Steel Institute CEO Thomas Gibson.

Now Trump is even promising to build his wall along the US-Mexico border out of steel, instead of concrete.

"If I build a wall and the wall is made out of steel instead of concrete I think people will like that ... I'll have it done by companies in our country that are now powerful great companies again," he said last week.

The Trump administration has argued that the weakening steel industry was a threat to national security and it needed protection. An increase in production in China led to a global oversupply and has hurt the American industry.

Trump expanded the steel tariff reach in June, including imports from allies like Canada, the European Union, and Mexico which had received an initial reprieve. He also put a 10% tariff on aluminum imports.

But the number of workers employed by the steel industry remains below its peak. Gibson said the industry hasn't fully recovered from the Great Recession.

While prices have come back down after a spike when tariffs were introduced, the market shifts have hurt some American companies that buy the metal and manufacture it into something else. Dozens of industry groups have urged the administration to lift the tariffs, including the US Chamber of Commerce.

Companies have submitted more than 44,000 requests to the government, seeking to exclude certain products from the tariff list. Requests are granted if it's determined that the item is not produced domestically, meaning that the business would have to import it from elsewhere.

Manufacturers making items ranging from household goods to machinery say Trump's tariffs are hurting their bottom lines. Automakers, for example, have said the tariff has driven up the cost of production in the United States by $400 per vehicle.

The duty is exacting real harm on businesses that make products like nails, in which a big component is steel. Mid Continent Nail, the country's largest nail manufacturer, has said it is clinging to life and was forced to lay off 150 of its 500 employees after the tariff was imposed.

The tariffs could cause more job losses for steel users than it creates on the producer side, said
Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics.

"But in those cases, the jobs are dispersed. They aren't very politically noticeable," he said.

American importers are also paying tariffs that Trump imposed on $250 billion of Chinese goods last year.

Overall, importers paid about $6.7 billion more in customs duties through September, compared to the year before.

Trump argues that China is engaging in unfair trade practices, including intellectual property theft and forced technology transfers. Many businesses agree that those issues must be addressed and support the administration's negotiations.

"What we don't support is a trade war, which is being waged through mounting tariffs," said US Chamber of Commerce CEO Tom Donohue Thursday during an annual address.

"Let me be very clear. Tariffs are taxes paid for by American families and American businesses -- not foreigners. Instead of undermining our own economy, let's work with our allies to apply pressure on China and use the tools provided by U.S. trade and international laws that we helped create," he said.

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