WASHINGTON -- President Donald Trump was standing on the bank 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."
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 early June pledge in Cincinnati may help domestic mills by restricting foreign steel and raising 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, Calif.-based California Steel Industries and the Port of Los Angeles, oppose blanket restrictions on steel imports, saying the kinds of slab steel that are important for their businesses and employment are not easily available from domestic producers. Nor do analysts think tariffs will address the problem created by excess steel production in China that has caused a global glut and lower prices.
None of that may matter to Trump and his trade officials. Two months ago, the president ordered a study of foreign steel shipments, and its findings and recommendations could be issued soon, giving him the green light to put his "America first" policy into action and remake a global trading system he thinks has undercut the U.S.
"It'll be the first big one," said William Reinsch, a veteran trade specialist in Washington, D.C. Until now, Trump's tough talk on trade has been just that, mostly talk, Reinsch said.
If Trump follows through as expected, history suggests U.S. steel prices will go higher, domestic steel producers will be happier and some workers laid off from mills will be called back -- at least for a while. U.S. steel manufacturing has gone through waves of restructuring and is more productive today, but the industry shed 14,000 steel jobs in the past two years, a product of excess global production and unfair trade, according to the American Iron and Steel Institute, a trade group for 18 producer companies. The industry now employs about 140,000, the group said.
Business on 07/01/2017