Manufacturers Worry About What Steel Tariffs May Mean for Agriculture

An announcement from President Trump last week that the U.S. would impose 25 percent tariffs on imported steel and 10 percent duties on aluminum caused a hullabaloo.

Details of the plan are not yet clear, but the initial news drew criticism from manufacturers who rely upon the metals.

Manufacturers worry the move will drive up steel prices and cut into profit margins during a moment in the industry that has offered the first signs of improved equipment sales after years of decline.

“One of our members compared steel in the shortline industry to sugar in the candy industry,” said Vernon Schmidt, the Association’s executive vice president. “What happens with this issue is fundamentally important to many, many member companies.”

Response to Trump’s announcement also drew threats of retaliation from overseas trading partners. If, for example, China chooses to import soybeans from elsewhere, it would cripple soybean producers who have just begun a recovery.

The Trump administration is expected to release details of the plan this week or next. In the meantime, much of the optimism that manufacturers felt as the president rolled back regulations and overhauled the tax code appears suspended.

“This is going to unfortunately throw some cold water on that momentum,” Jason Andringa, chief executive of member company Vermeer Corp., told the Wall Street Journal. “It’s going to bring a dynamic of risk and volatility that we haven’t had to deal with in a while.”

This is not the first administration to impose tariffs on steel. In March 2002, President George W. Bush introduced sweeping tariffs and quotas on a range of steel imports. Before dropping the tariffs in late 2003, they led to a 3 percent increase in steel prices and were “extremely disruptive to U.S. firms that rely on steel imports to make consumer goods,” according to a 2003 review of the move by the Peterson Institute of International Economics.

A 2003 study by research firm Trade Partnership Worldwide estimated that higher steel prices cost 200,000 steel-
consuming jobs that year, largely in manufacturing. Laura M. Baughman, the firm’s president and a co-author of the 2003 study, said of Trump’s new tariffs: “steel consumers will get hit again.”

Source: Wall Street Journal