Manufacturers are having mixed reactions reactions to President Trump’s implementation of a 25 percent tariff on steel imports and 10 percent on aluminum.
“It’s good for us,” said Howard Lohmann Sr., president of Logan Steel in Meriden. “It drives us to buy domestic, American steel. They’re ramping up production. There is plenty of steel.”
Logan Steel, on Empire Road, buys carbon, stainless and aluminum cuts to sell directly to customers or to craft and build tools or fabricate other finished products.
Lohmann’s comments echo those of John Ferriola, chairman and president of Nucor Corp., which has a production operation on Toelles Road in Wallingford.
“We thank the president for taking decisive and meaningful action to address the massive flood of dumped and illegally subsidized steel imports into the U.S.,” Ferriola stated in a statement after the tariff was announced.
“For too many years, Nucor and other American steelmakers have dealt with this chronic problem, which is fueled by foreign governments’ subsidies and preferential treatment for their steel industries in violation of international trade agreements and free market principles.”
Nucor manufacturers steel products with operating facilities primarily in the U.S. and Canada, producing carbon and alloy steel in a variety of forms. The global steel industry has more than 800 million tons of excess production capacity, approximately half of which is from China, according to Nucor.
Foreign government interference in global steel markets has disrupted trade flows and created the overcapacity problem, but economists and those who rely on raw materials view the tariff as an abrupt action that could cost more jobs than it saves.
The tariffs are good for steel producers that melt and produce their own steel, but for those like Ulbrich Steel in Wallingford, which are reliant on raw materials, they could cause more pain.
“It’s disruptive,” said president Frederick C. Ulbrich III. “The story is not written yet.”
Some of Ulbrich’s business centers on stainless steel products, where raw materials are purchased overseas. After March 23, when the tariffs are scheduled to take effect, Ulbrich would need to pay a $25,000 tax when purchasing $100,000 worth of raw materials from France.
Ulbrich could file for an exemption, but the process takes 90 days and the company would still need to pay the tax in the meantime.
“There are going to be issues,” Ulbrich said. “What’s going to happen on March 24? There’s going to be a duty. We’re buying some of that overseas, and the domestic people are already increasing prices.”
Ulbrich also said it would take domestic suppliers two years to increase their capacity and meet demand. Aluminum is in a different category and the industry stands to benefit from the tariffs, Ulbrich said.
Economist Peter Gioia, of the Connecticut Business and Industry Association, described the president’s action on steel tariffs as “using a sledgehammer when a more precise approach would do.”
“Certainly, other countries — especially China— have taken advantage of the U.S. on steel imports, but the tariff is too broad and may backfire,” Gioia said in a statement. He also pointed to Connecticut firms, including defense contractors and their suppliers, that use imported steel or steel components.
“This steel tariff threatens these businesses,” Gioia said. “We need policies that benefit big firms like U.S. Steel, and small metal formers, of which there are dozens throughout Connecticut.”
The U.S. steel industry employed about 147,000 people in 2015, according to the Commerce Department's Bureau of Economic analysis. However, manufacturers that need steel employ about 6.5 million.
Other business experts agree the tariff action was “a shot from the hip that can ricochet,” Gioia said.
“The initial rollout was such a shotgun approach,” said David Cadden, a business professor at Quinnipiac University. “The U.S. steel industry has changed significantly. What it boils down to is whose ox is getting gored?”
Cadden said the tariffs will force the steel industry to remake itself once again. In the age of automation, there might not be as many jobs as it would like.
“Once you pull a trigger on a trade war, those who are affected fight back,” Cadden said.
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