PHOTO: Les Chatfield, Flickr CC
In the past few days, U.S. Commerce Secretary Wilbur Ross signaled an indefinite delay in a long-anticipated decision on whether to impose stiff new tariffs on foreign steel.
Ross told Bloomberg News that the matter will now be pushed back until after the federal tax reform bill. That process is just getting started and at least one Republican U.S. Senator says that the tax bill will make the health care bill look like a “piece of cake.” That’s significant because the Republican health care bill has failed once and been pulled back from a vote a couple more times. This, despite the GOP holding both houses of Congress and the White House. As such, we don’t know when, or maybe even if, additional foreign steel tariffs will happen.
It’s been widely assumed that these tariffs will happen, and they still seem probable at least for a time. Much of the recent stock market success of American mining and steel companies has been backed by the notion that not only would demand for steel be high this year, but that U.S. steelmakers would reclaim more competitive advantage in the marketplace.
After Houston suffered historic hurricane damage late last month, I wrote about how Mesabi Iron Range mines were poised to provide significant amounts of steel for recovery efforts. And that was before more hurricanes struck Florida, Puerto Rico and nations in the Caribbean. So demand is holding up extremely well.
However, longtime reader and commenter Gerald points out this tariff delay will allow manufacturers and construction firms to continue stockpiling foreign steel while the U.S. further mulls the tariffs.
All of this seems supported by the fact that steel stocks dropped after Ross’s announcement last week.
One of the biggest problems with steel tariffs is the fact that while tariffs provide a windfall for American mines and steel mills, they’re costly for manufacturers and those who do business overseas, thus subjecting themselves to retaliatory tariffs.
For decades, Democratic and Republican presidents alike have danced around the contradictory interests of different sectors of the American economy. Ultimately, the U.S. tends toward tariffs when foreign companies are dumping steel at a loss, but at all other times tariffs are quietly lifted or reduced. That’s why President Trump’s declaration of steep tariffs on steel from countries where governments subsidize the steel industry was so dramatic.
However, like many political leaders before him, Trump’s situation is complicated. His own administration is divided on the matter, given the impact tariffs would have on trade with China and prices for consumer goods and building materials.
Then there is this. Port cities around the United States have been building enormous import docks literally designed to offload steel from overseas. The Panama Canal is being widened to allow double sized Asian freighters laden with steel through to the Atlantic Ocean. Politicians can say one thing, but business interest tend to invest based on a perceived future.
It’s globalism, see. I think, in our hearts, liberals and conservatives both see something wrong with it. It’s changing our economy and communities, often not for the better. But this same globalism is probably the reason WWIII never happened. Regardless of your views, globalism continues, largely unabated. In fact, even the nativist presidency of Donald Trump can be tied to the influence and money the man acquired overseas. Thus, the solutions won’t be easy. Frankly, they will involve telling people making money off the status quo that their interests are secondary to the American people.
Trump says he will do this. If you believe him, I hope you’re right. But I don’t.
Speak Your Mind