Firms say they need to be free of tariffs on steel
Pittsburgh Post-Gazette
The same day that President Donald Trump announced his plans to impose across-the-board penalties on steel and aluminum imports, specialty metals producer Allegheny Technologies announced it had received approval for plans to create 100 high-paying jobs in the region.
Those plans are based on importing stainless steel slabs from Indonesia and processing them at Western Pennsylvania mills. But the imports will cost 25 percent more unless they are given an exemption from the tariffs that the
White House announced Thursday.
Whether that relief will be granted won’t be known until Mr. Trump discloses the details of his initiative, something that could happen this week.
On Monday, Mr. Trump insisted that he’s “not backing down” on his plan to impose stiff tariffs on imported steel and aluminum despite anxious warnings from House Speaker Paul Ryan and other congressional Republicans of a possible trade war.
The president said that North American neighbors Canada and Mexico would not get any relief from his plan to place the tariffs on the imports but suggested he might be willing to exempt the two longstanding allies if they agreed to better terms for the North American Free Trade Agreement.
In the meantime, U.S. steel and aluminum users wait and worry.
“No one knows exactly what’s going to happen. The devil’s in the details and we don’t know any details,” said David Herring, of DB&S Steel in Beaver Falls.
DB&S makes products from thin gauge tool steel and relies heavily on imports because U.S. steelmakers don’t make steels the company needs. “It’s pretty bad news for us,” Mr. Herring said. “For us, it’s negative all around.”
He is hoping there will be a chance to apply for an exemption, something contemplated under the recommendations that Commerce Secretary Wilbur Ross sent to the White House last month.
In addition to 25 percent tariffs on imported steel, Mr. Trump wants to levy 10 percent tariffs on imported aluminum. The plan makes good on a campaign pledge to combat a crush of imports that domestic steelmakers and aluminum producers have complained about for years.
Much of their ire is directed at China, which steelmakers blame for the bulk of a 700-million ton excess of global steelmaking capacity. Mr. Ross’ report said China makes nearly as much steel in one month as U.S. producers make in a year.
“It adds to the frustration of working people. It’s a legitimate issue,” said John Tumazos, a metals and mining analyst based in Holmdel, N.J.
In the 2016 election, Mr. Trump’s criticism of trade agreements and China’s trade policies found support with working-class Americans whose wages had stagnated over the years. Victories in big steel-producing states such as Ohio, Pennsylvania and Indiana demonstrated that his tough trade talk had a receptive audience.
Critics on Monday said the sweeping tariffs proposal will eliminate significantly more jobs in steel- and aluminum-using industries than it will create among steel and aluminum producers. The Trade Partnership, a Washington, D.C. trade consulting firm, estimates penalizing imports will create 33,464 jobs in the steel and aluminum industries, but eliminate 179,334 jobs throughout the rest of the economy.
The estimate excludes jobs that might be lost if trading partners retaliate against U.S. exports, the firm said.
“It has more of a substantial impact than the White House or even the Commerce Department realized,” said Nithya Nagarajan, an attorney who specializes in trade issues for Husch Blackwell, a law firm. “We have clients where there is no domestic source of supply.”
Ms. Nagarajan is hoping there will be an appeals process for importers, but whether there will be and what the rules will be are unknown, she said.
Mr. Tumazos said at least five U.S. steel mills import more than 7 million tons annually of slabs or other unfinished steel and convert the steel into products used by auto makers and other industries.
He said U.S. companies that import steel wire rod to make screws, nails, coat hangers and other products may also ask to be excused from the penalties. Steel already represents about twothirds of their production costs and their customers will balk at paying 25 percent more, Mr. Tumazos said.
“There are many, many categories of exemptions that are going to get requested,” the analyst said. “There’s going to be legitimate and illegitimate complaints.”
John Anton of IHS Markit, an economic research firm, wondered whether the tariffs will be imposed on steel and aluminum imports needed for the national defense or on products that domestic steel and aluminum producers do not make anymore.
Mr. Ross’ report indicated that companies that apply for an exemption would get a decision within 90 days, Mr. Anton said.