Saturday, August 11, 2018

From Mills To Manufacturers, Steel Tariffs Produce Winners And Losers

President Trump boasts that his trade policies are bringing back the steel industry, but recent corporate earnings reports make clear that they're also hurting the bottom line at many manufacturing companies. "We're putting our steel workers back to work at clips that nobody would believe, right?" Trump asked the crowd at an Aug. 1 rally in Pennsylvania. Major American steelmakers have reported higher-than-expected revenue in the second-quarter, thanks in part to Trump's 25 percent tariffs on imported steel. Nucor, the largest US steel company, said in July that its second-quarter earnings more than doubled, partly because of higher steel prices. Still, the number of manufacturers that produce steel is dwarfed by the number that consume it, and many companies have complained they're facing higher prices because of the Trump administration's tariffs on steel and aluminum. They include major names such as General Motors, 3M, Stanley Black and Decker, and Caterpillar. "Global steel costs have risen substantially and, particularly in the U.S., they have reached unexplainable levels," Whirlpool CEO Marc Bitzer said during a recent analyst call. "Uncertainty related to tariffs and global trade actions" is pushing up costs, he added. Hundreds of companies have asked to be exempted from the steel and aluminum tariffs, but their requests have often been rejected, according to a recent New York Times report. "The tariffs are working exactly the way we would expect them to. They're going to produce winners and losers," says Mary Lovely, a professor of economics at Syracuse University. The outlook is different for companies that must buy steel, she says. "The companies that use steel, like aluminum can manufacturers, or companies that make steel vats for pharmaceuticals or the dairy industry, they're going to be hurt by this," Lovely says. Higher costs will force some of them to raise prices, hurting their sales, she notes. The tariffs' impact can be especially hard on small manufacturers...MORE

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