As US plans to review steel tariffs against the EU, local manufacturers remain divided on the issue
As Trump-era steel tariffs remain intact, the Biden administration reaffirmed this week he could negotiate with European Union on import tax – a possibility that arouses mixed reactions from local manufacturers.
Former President Trump imposed the levies in 2018 to help domestic steelmakers like US Steel. But the Pittsburgh-based producer said he welcomed talks with the EU, hoping the 27-nation bloc would agree to crack down on a global steel glut.
“It is appropriate that article 232 [tariffs remain] unchanged during dialogue with the EU, ”the company said in a statement. “We appreciate the focus the Biden administration has placed on addressing global steel overcapacity as a significant threat to America’s steel industry, steel jobs, and national security.”
Trump authorized the tariffs under Section 232 of the Trade Expansion Act, citing national security concerns. While this justification has upset European allies, US Secretary of Commerce Gina Raimondo rented the tariffs earlier this year for helping “save American jobs.”
During President Biden’s visit to Brussels this week, the United States and the European Union promised work together to resolve tensions caused by tariffs. To facilitate negotiations, the EU suspended for six months a series of retaliatory tariffs on American products. European officials hope the talks will be concluded by the end of the year.
“At some point, something has to give”
But easing tariffs against EU countries would not help Mercer County steel coil maker NLMK USA and could even hurt it.
NLMK CEO Bob Miller said domestic and European producers are not supplying the type of steel his business needs and lifting tariffs would help European companies make the same finished steel products as NLMK.
“It would compete with our product,” Miller said. “So it’s very simple – European steel is coming in, and there are usually a few traders… sitting in desks, selling [it] people who consume steel. But no American worker does anything with it.
NLMK imports steel slabs from Russia and Brazil to make steel coils found in household appliances. Miller said suppliers are passing the 25% steel levy on to his company, limiting the amount of raw materials the company can buy and sometimes forcing layoffs.
“It certainly increased the cost, and it also limited our ability to produce and contribute as a supplier,” Miller said of the import tax. “So we haven’t been able to operate since 2018 at maximum levels simply because we can’t get enough raw materials to run our facilities.”
At full capacity, the Russian-owned company employs 1,200 people at three US factories, Miller said. In November, the US Department of Commerce agreed to reimburse NLMK “a significant portion” of the tariffs it had previously paid. The rebate was part of a settlement over a lawsuit challenging the department’s denial of 86 claims NLMK had made for tariff exemptions.
Mark Beichner, COO of Canonsburg-based steel parts maker AccuTrex, opposes the tariffs. In May, AccuTrex joined 300 U.S. manufacturers in a letter who urged Biden to lift US tariffs on steel and aluminum.
Unlike Miller, however, Beichner believes that an easing of the levies against the EU could help his company, whose customers represent industries ranging from aerospace to renewables.
Costs at AccuTrex have skyrocketed amid a steel shortage due to the pandemic, forcing the company to raise prices and delay orders for several months. Beichner said his company typically uses domestic suppliers, but when a US steelmaker told him he couldn’t deliver 50,000 pounds of material before November or December, he looked for new options in Italy, a member of the ‘EU.
“We’re really all for anything that helps standardize the supply chain here locally. And if it’s about removing tariffs, so be it, ”Beichner said.
Supporters of the tariffs argue that critics should not blame the levies for the supply chain disruptions COVID-19 has caused around the world. But Beichner replied, “I would invite them to come in and talk to customers who are not really happy that our prices have gone up 70-75%, and also talk to them about the inability to get our customers’ products. . .
“If you don’t have the raw material and the price spikes are skyrocketing… at some point, something has to give. “
Tariffs: job creator or killer?
Despite Beichner’s frustration with the steel shortage, the main concern of tariff supporters is the global overproduction of the material.
Kevin Dempsey, who heads the American Iron and Steel Institute, noted that countries around the world, including Europe, are using subsidies and tax breaks to support domestic suppliers, resulting in excess capacity that drives down costs. world steel prices. China is of particular concern.
“The underlying problem is that we don’t have international rules strong enough to prevent governments from subsidizing the building and maintenance of unprofitable steel capacity,” Dempsey said.
But US tariffs, he added, help “prevent [the resulting] increased imports, to give US industry a chance to recover, stabilize, reinvest and grow and gain a foothold.
In March, the Institute for pro-union economic policy reported that since Trump ordered the tariffs in 2018, U.S. steelmakers have pledged nearly $ 16 billion in upgraded facilities that promise to cut carbon emissions. EPI estimates that these projects will create 3,200 new jobs in steel production.
“The 232 tariffs are working,” said Philip Bell, president of the Steel Manufacturers Association, the nation’s largest trade group for steelmakers. “And that has a very big effect on the domestic steel industry in the United States: what it does is it modernizes the American steel industry; it creates more efficient and more efficient factories that also produce steel in a more sustainable way. …. It is long overdue.
But Richard Chriss, president of the American Metals Supply Chain Institute, countered that tariffs have held back investment by the manufacturers his organization represents.
On the net, he said, tariffs have hurt U.S. jobs: data shows U.S. steel mills have suffered modest job gains a year and a half after Trump’s tariffs went into effect; but the Federal Reserve estimates that price increases resulting from tariffs resulted in the loss of approximately 75,000 manufacturing jobs in the United States.
Additionally, Chriss noted that excess capacity remains an issue in the steel market.
“In fact, China’s steel capacity and production has not declined at all since these tariffs came into effect,” he said. “Therefore [the tariffs are] do not meet their stated objective. They create a lot of hardship and consternation for our manufacturers and our allies abroad. And they really hurt American consumers.