No de­ci­sion yet from Trump on steel tar­iffs

Plenty of wig­gle room on di­rec­tion he’ll take

Kuwait Times - - BUSINESS -

Pres­i­dent Don­ald Trump pledged dur­ing the cam­paign to help US fac­tory work­ers by slap­ping tar­iffs on for­eign steel. But his long-awaited de­ci­sion on the is­sue is run­ning be­hind sched­ule and administration of­fi­cials are leav­ing plenty of wig­gle room on what di­rec­tion he’ll take. Com­merce Sec­re­tary Wil­bur Ross ini­tially hoped to fin­ish a re­port on tar­iffs last month, but his de­part­ment has been hold­ing off as the Pen­tagon weighs in about im­pact of steel tar­iffs on na­tional se­cu­rity. The de­lay is an ex­am­ple of the dif­fi­culty Trump faces in de­liv­er­ing on his am­bi­tious pol­icy agenda - on taxes, health in­sur­ance and more - as quickly as he told vot­ers he could.

White House of­fi­cials have hinted that tar­iffs still are com­ing. Asked on “Fox News Sun­day” over the week­end if the pres­i­dent planned to im­pose sanc­tions on for­eign steel, White House chief of staff Reince Priebus re­sponded: “My guess is that he will be­cause he promised he would.”

There are trade-offs from tax­ing for­eign steel that in­clude higher prices for con­sumers and man­u­fac­tur­ers that rely on steel, as well as strained re­la­tion­ships with trade partners. The pos­si­ble risks be­came more ap­par­ent last week at the sum­mit of the 20 lead­ing rich and devel­op­ing na­tions in Ger­many. The sum­mit ended with a dec­la­ra­tion that gov­ern­ments would de­velop “con­crete pol­icy so­lu­tions that re­duce steel ex­cess ca­pac­ity” by Novem­ber 2017, but the U.S. po­si­tion was ag­gres­sive enough that there were con­cerns about a po­ten­tial trade war.

Sup­port­ers of the tar­iffs say the move would help crack down on ex­cess steel­mak­ing by China. Op­po­nents say it would raise prices for con­sumers and man­u­fac­tur­ers that turn steel into cars, fur­ni­ture and other prod­ucts. Scott Paul, pres­i­dent of the Al­liance for Amer­i­can Man­u­fac­tur­ing, sup­ports higher steel tar­iffs but notes that the ini­tial time­line set by the administration was “very am­bi­tious.” He says that tar­iffs could help do­mes­tic steel mills while en­cour­ag­ing other coun­tries to take sim­i­lar moves against China. Paul said that some of­fi­cials and ad­vo­cacy groups have slowed the process to fine-tune the pol­icy, while oth­ers are hop­ing that a slower pace of dis­cus­sions will de­rail the de­bate. He said he trusts that “at the con­clu­sion of the process, there will be a well thought-out ra­tio­nale for what­ever re­lief is pro­vided.”

In April, Trump asked the Com­merce De­part­ment to launch an in­ves­ti­ga­tion into whether for­eign steel im­ports posed a threat to na­tional se­cu­rity, on the grounds that the Amer­i­can mil­i­tary re­lies on steel for air­planes, ships and other equip­ment. Steel also goes into roads, bridges and other crit­i­cal in­fra­struc­ture. The in­ves­ti­ga­tion re­flects the administration’s de­ter­mi­na­tion to use ex­ist­ing trade laws more ag­gres­sively to com­bat what it sees as un­fair prac­tices by US trad­ing partners. Re­strict­ing steel im­ports, it rea­soned, would help re­store US man­u­fac­tur­ing jobs and re­duce an Amer­i­can trade deficit that came in at $502 bil­lion last year. The administration’s trade team is heavy with steel in­dus­try veter­ans: US Trade Rep Robert Lighthizer rep­re­sented US steel­mak­ers as a Washington trade at­tor­ney. As a pri­vate in­vestor, Ross, the com­merce sec­re­tary, bought and turned around sev­eral bank­rupt steel com­pa­nies. But the Pen­tagon is also pro­vid­ing its own in­put on the is­sue while the Com­merce De­part­ment’s re­port has yet to be fi­nal­ized. To crit­ics, the administration’s na­tional se­cu­rity case against steel im­ports looks shaky. The Amer­i­can mil­i­tary does not ap­pear crit­i­cally de­pen­dent on steel im­ports. The US pro­duces 70 per­cent of the steel it con­sumes. And just 3 per­cent of steel ship­ments go to na­tional de­fense or home­land se­cu­rity, ac­cord­ing to the Amer­i­can Iron and Steel In­sti­tute.

Low prices

Many of the steel in­dus­try’s trou­bles can be traced to low prices re­sult­ing from mas­sive over­pro­duc­tion by China, which churns out nearly half the world’s steel. But the United States has al­ready put up big bar­ri­ers to Chi­nese steel im­ports. So any re­stric­tions or tar­iffs on steel would land else­where on US ally Canada (which sup­plies 17 per­cent of US steel im­ports), Brazil (13 per­cent) and South Korea (12 per­cent). “If we were to im­pose tar­iffs and quo­tas be­cause of the Chi­nese prob­lems, but we re­ally hit our friends and al­lies - then how does all this ad­vance our in­ter­ests?” says Amanda DeBusk, head of the in­ter­na­tional trade de­part­ment at the law firm of Hughes Hub­bard & Reed.

Then there are Amer­ica’s steel-con­sum­ing in­dus­tries, such as au­tomak­ers and equip­ment man­u­fac­tur­ers. They say they would be hurt if sanc­tions drove up steel prices. Daniel Pear­son, se­nior fel­low at the lib­er­tar­ian Cato In­sti­tute, says steel mills em­ploy just 140,000 work­ers - a frac­tion of the 6.5 mil­lion who work for man­u­fac­tur­ers that con­sume steel.

Stu­art Speyer, the pres­i­dent of Dick­son, Ten­nessee-based Tennsco Corp, em­ploys 650 work­ers mak­ing cab­i­nets, lock­ers, book­cases and other stor­age con­tain­ers made of steel. He said Tennsco re­cently lost a 50-year cus­tomer who dis­cov­ered cheaper prices else­where and that new tar­iffs would make things worse. “In an at­tempt to pro­tect the US steel in­dus­try, many more Amer­i­can jobs will in­ad­ver­tently be lost,” Speyer said. — AP

HAR­MONY: In this photo taken Feb 12, 2015, cut pan­els of steel used to make blades to build fans for in­dus­trial ven­ti­la­tion sys­tems are stored on the pro­duc­tion floor. — AP

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