Tar­iffs could boost prices in Ari­zona

Puni­tive moves on steel and alu­minum im­ports be­gin to squeeze sup­plies

The Arizona Republic - - Business - Russ Wiles Ari­zona Repub­lic USA TO­DAY NET­WORK Reach the re­porter at 602-444-8616 or russ.wiles@ari­zonare­pub­lic.com.

Pres­i­dent Don­ald Trump’s de­ci­sion to im­pose tar­iffs on some im­ports of steel and alu­minum has al­ready squeezed sup­plies and boosted prices, and some Phoenix-area busi­nesses worry that things could get worse be­fore they get bet­ter.

“It looks like steel might sky­rocket and get hard to source (or ob­tain), with longer lead times,” said Greg Hanker­son, co-owner of Vin­tage In­dus­trial, a Phoenix com­pany that makes cus­tom steel fur­ni­ture.

“I wouldn’t be sur­prised if peo­ple start steal­ing steel off the sides of build­ings.”

Doug Cone, co-owner of dis­trib­u­tor Ari­zona Met­als in Mesa, said sup­plies have tight­ened for prod­ucts such as fla­trolled steel that’s used in au­to­mo­biles, ap­pli­ances and other big-ticket items.

“I ex­pect (busi­nesses) to pull the plug on some projects over the sum­mer,” he said, cit­ing con­struc­tion de­lays or can­cel­la­tions as a pos­si­bil­ity.

Cit­ing na­tional se­cu­rity con­cerns, Trump in early March made good on a vow to im­pose tar­iffs of 25 per­cent on steel and 10 per­cent on alu­minum en­ter­ing the coun­try.

The pres­i­dent later back­tracked a bit, giv­ing ex­emp­tions for steel from Canada, Mex­ico and other coun­tries. The tar­iff de­ci­sion has largely boiled down to a dis­pute with China, with both na­tion­sthreat­en­ing to slap more tar­iffs on the other’s ex­ports.

One stan­dard type of steel, hot rolled coils, has jumped from $590 a ton in Oc­to­ber to near $860 to­day, ac­cord­ing to fu­tures prices on the Chicago Mer­can­tile Ex­change.

The same cat­e­gory of steel sold for about $360 a ton in De­cem­ber 2015. With a smaller tar­iff, alu­minum prices haven’t changed as much­but have risen a bit re­cently.

The tar­iffs elicited sharp crit­i­cism out­side the steel and alu­minum in­dus­tries, es­pe­cially from groups rep­re­sent­ing man­u­fac­tur­ers and busi­nesses gen­er­ally.

Glenn Hamer, pres­i­dent and CEO of the Ari­zona Cham­ber of Com­merce and In­dus­try, called Trump’s poli­cies “eco­nomic mad­ness.”

“The pres­i­dent’s an­nounce­ment that he’ll im­pose a 25-per­cent tar­iff on steel and a 10-per­cent tar­iff on alu­minum fails Eco­nom­ics 101,” Hamer said in a pre­pared state­ment shortly af­ter the tar­iffs were an­nounced.

He ac­cused Trump of “mak­ing life more ex­pen­sive for hard­work­ing Amer­i­can fam­i­lies” while “harm­ing Amer­i­can man­u­fac­tur­ers by mak­ing prod­ucts stamped ‘Made in the USA’ less com­pet­i­tive over­seas.”

Tar­iffs are “likely to create new chal­lenges in the form of sig­nif­i­cant added costs for man­u­fac­tur­ers and Amer­i­can con­sumers,” said the Na­tional As­so­ci­a­tion of Man­u­fac­tur­ers in a state­ment.

“Tar­iffs also run the risk of pro­vok­ing China to take fur­ther de­struc­tive ac­tions against Amer­i­can man­u­fac­tur­ing work­ers.”

Trump’s tar­iff an­nounce­ments were a cat­a­lyst for the re­cent stock-mar­ket slide, though prices have re­cov­ered a bit. The broad­est mea­sure of the mar­ket, the Wil­shire 5000 To­tal Mar­ket In­dex, as of April 13 was down about 7 per­cent or $2.4 tril­lion from its March peak.

Con­versely, the pro-tar­iffs Coali­tion for a Pros­per­ous Amer­ica pre­dicts that the con­se­quences will be “nearly un­de­tectable, with the net job im­pact ap­proach­ing zero” and vir­tu­ally no change to the na­tion’s gross do­mes­tic prod­uct.

The group claims to rep­re­sent a po­lit­i­cal cross sec­tion of Amer­i­cans and in­cludes cur­rent or for­mer union, agri­cul­tural and steel-com­pany ex­ec­u­tives as di­rec­tors. It projects a net gain of 19,000 jobs in the steel and alu­minum in­dus­tries.

Michael Stumo, the coali­tion’s chief ex­ec­u­tive of­fi­cer, in a pre­pared state­ment said anx­i­ety over cost in­creases is “overblown.” He has called for even more pro­tec­tion from for­eign com­pe­ti­tion.

The Alu­minum As­so­ci­a­tion said it sup­ports tar­iffs aimed at China but also said it was pleased the White House ex­cluded NAFTA trad­ing part­ners Canada and Mex­ico. Other na­tions in­clud­ing Aus­tralia, South Korea, Brazil and pro­duc­ers in the Euro­pean Union were later ex­empted.

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