While Donald Trump's Section 232 tariffs were good for the USA's primary steelmakers, the story further downstream has been far from satisfactory with predictions of fewer manufacturing jobs and some companies considering leaving the USA for countries where steel is less expensive.
An 'island of high steel prices' is how members of the Coalition of American Metal Manufacturers and Users (CAMMU) are describing the outcome of Section 232 tariffs, imposed in 2018 by the then President of the United States, Donald Trump.
Testifying before the US International Trade Commission (USITC), CAMMU members and other domestic manufacturers spoke of shipping delays, supply shortages and the loss of business to overseas competitors.
The hearing was part of an investigation by the USITC, directed by Congress, to study the impact of the controversial Trump era tariffs (including Section 301 tariffs) in 'trade, production and prices in the industries most affected by these tariffs'.
CAMMU is by no means small fry. It describes itself as 'a broad organization of US manufacturers and associations representing more than 30,000 companies and over one million American workers in the manufacturing sector'.
Executive director Paul Nathanson testified that a survey of more than 70 CAMMU member companies, conducted over the past fortnight,found 84% of respondents having difficulty sourcing steel and 87% of respondents experiencing delays in receiving steel supplies. The survey found that 35% of respondents reported experiencing supply delays exceeding two months, and 32% experiencing delays exceeding three months.
We need stability and certainty in our industry and the Section 232 national security tariffs on our allies and now some Tariff Rate Quotas create more instability, not less, even if you do not import much steel."Stuart Speyer, president of Tennsco LLC.
According to Stuart Speyer, president of Tennsco LLC, certainty and stability are needed and the Section 232 tariffs and the recently introduced Tariff Rate Quotas create more instability. "In my view, when the Section 232 tariffs were implemented, they were a solution in search of a problem...Any gains seen by the steel industry from the tariffs has been overshadowed by the losses in the companies downstream," Speyer said.
Scott Buehrer, president of B Walter & Company, Wabash, Indiana, commented that the longer the steel tariffs remain, the lower the long-term demand will be for American made steel. This, he said, would result in fewer manufacturing jobs at domestic steel users and domestic steel producers.
A number of US-based trade associations also voiced an opinion, with comments from the Precision Metalforming Association, the Industrial Fasteners Institute and the Precision Machined Products Association.
"What matters most to US manufacturers is the price difference between what they pay for steel versus what their global competitors are paying."David Klotz, president, Precision Metalforming Association.
David Klotz, president of the Precision Metalforming Association, testified that Section 232 tariffs placed US manufacturers at a significant disadvantage, while Dan Walker, managing director of the Industrial Fasteners Institute said that the combination of high steel prices and very long lead times has resulted in his members losing long-time customers to overseas competitors – primarily in Korea and Taiwan.
Miles Free, director of industry affairs at the Precision Machined Products Association, speaking about supply chain issues, commented: "Without availability, we cannot make parts, plain and simple."
"If the goal of the Section 232 tariffs was to substantially increase the supply of steel and aluminium in the US, they did not achieve that goal."Miles Free, director of industry affairs, Precision Machined Products Association.
David Klotz of the Precision Metalforming Association sounded a note of desperation when he testified that if the situation wasn't resolved, it could result in some manufacturers leaving the USA for other countries where steel is less expensive – and turn foreign-made steel into products to ship back to the US tariff-free. "Because the domestic steel industry exports very little steel, when these manufacturers close or move offshore, the domestic industry will also suffer," he said.