Steel tariffs to aid some, hurt others
Potential losers would be firms that depend on steel and aluminum.
President Donald Trump’s plans to order new tariffs on steel and aluminum imports are seen as a boon to the steel industry and its employees but a hindrance to jobs, trade partners and markets for American-made products overseas.
Trump announced Thursday he would levy penalties of 25 percent on steel and 10 percent on aluminum imports. He had been weighing protective trade action under a rarely used “Section 232” of the U.S. trade law, which allows restrictions on imports to protect national security.
While it is too early to discern how such a tariff would pan out in the long run, E.J. Ume, a Miami University assistant professor of economics with a focus on mac- roeconomics, said such action could be a drag on the economy.
Potential losers in such a scenario would be corporations that depend heavily on steel and aluminum, including automakers, aviation companies, construction companies, those who serve highway infrastructure projects and beer companies, because manufacturing aluminum cans will become more expensive, Ume said.
“Their input costs will potentially go up, and ... that means profits go down,” he said. “That could potentially lead to layoffs, so it could actually impact the American citizens.”
In addition, consumers would likely find it costs more to purchase vehicles, canned food, beer and other items, he said.
“We don’t produce enough of that material domestically to satisfy our domestic demand, so a supply shortage would lead prices to go up,” he said.
The tariffs are viewed as a “big win” by those in the steel industry, which will be able to ramp up supply to meet demand, Ume said.
AK Steel Chief Executive Officer Roger Newport, along with leaders of other steel companies in the United States, joined Trump at the White House on Thursday to talk about Section 232 remedies.
Newport said the company, whose corporate headquarters are in West Chester Twp., supports and commends Trump for announcing the actions he plans to take to stem the tide of unfairly traded steel imports that threaten the national security of our country.
“This is a strong, important step to combat the effects of global steel overcapacity and address actions by other countries to circumvent U.S. trade laws and orders designed to ensure a level playing field,” Newport said.
AK Steel is Butler County’s third-largest employer, with about 2,400 full-time employees at its Middletown Works and corporate headquarters. It employs 9,200 people at manufacturing operations across seven states, as well as in Canada and Mexico.
But while the tariffs would likely lift the steel industry, they could also spark a trade war that hurts the broader economy, Ume said.
“It’s a big win for companies like U.S. Steel but, aside from that, I don’t know if we have any big winners,” he said. “Our trading partners are taking a hit: China, Canada, Mexico. This is not good news for them and, moreover, you have the potential for a trade war. These countries could actually retaliate. That pushes cost up even more, so the things that we import from other countries, now the price of those goods may be higher.
“Ultimately, it’s impacting the end consumer through higher prices and the potential for layoffs.”
Ohio employers that could be hurt include GE, GE Aviation, Caterpillar, Ford, GM, Honda and many others, Ume said.
“Despite the fact that Ford buys the vast majority of its steel and aluminum for U.S. production in the U.S., this action could result in an increase in domestic commodity prices — harming the competitiveness of American manufacturers,” said Christin Baker, a Ford spokeswoman.
But MillerCoors Trenton Brewery in St. Clair Twp. in Butler County, which brews more than 60 beer brands and employs about 530 people, said it was “disappointed” in Trump’s announcement.
“We buy as much as domestic can sheet aluminum as is available, however, there simply isn’t enough supply to satisfy the demands of American beverage makers like us,” MillerCoors said on Twitter. “American workers and American consumers will suffer as a result or this misguided tariff.”
Matthew Shay, president and CEO of the National Retail Federation, the world’s largest retail trade association, called the tariffs “a tax on American families” and said there is nothing the United States would gain from “such a one-sided policy.”
“When costs of raw materials like steel and aluminum are artificially driven up, all Americans ultimately foot the bill in the form of higher prices for everything from canned goods to automobiles,” Shay said. “These tariffs threaten to destroy more U.S. jobs than they will create while sending an alarming signal to our trading partners and diminishing markets for American-made products overseas.”
MillerCoors, which employs more than 8,000 people nationwide, including 500 of them at its Butler County brewery, took to social media to say it was “disappointed” with Trump’s announcement of a 10 percent tariff on aluminum.
In testimony to Congress last May, AK Steel’s Newport said the company welcomes the Department of Commerce’s Section 232 investigation of the serious threat posed by imported steel to the nation’s national security.
“For decades, the steel industry has battled global overcapacity and the oversupply of U.S. imports, many of them dumped and subsidized,” Newport said. Trump, in a series of early morning tweets Friday, insisted the tariffs would help the U.S. economy, something that has been contended by members of not only his own party, but his top advisers as well.
“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump tweeted.