Final Thoughts
Final Thoughts
Written by John Packard
February 28, 2018
As much as the mills are gloating about President Trump’s decision to lay a 25 percent tariff on foreign steel, remember one thing – not one of them asked for it. When it was handed to them, they took it. They did not fight to protect those products that they don’t like to make (or can’t make according to the customer base).
I found interesting one of the responses I got today from a former OEM steel buyer now with a service center, as I am personally not a big supporter of political intervention – especially if the so-called harmed parties did not request it. (Although there are some absolutely bad hombres sending in pipe and some other products at foolish prices.) Here is what one industry executive thinks will happen from here:
John, I predict the following:
- Raise steel prices in the USA by 25%
- Increase the profitability of domestic USA steel companies 5 to 600%
- Make all steel based products produced in the USA much less competitive vs. import steel based products
- Increase unemployment to over 7% in next 18 months
- Reduce GDP to near 0% in next 24 months
- Increase friction with International trading partners further aggravating the balance of payments issue and reducing demand for our export products by retaliation
- This together with the huge deficit spending to occur will drive inflation to over 5% per year and drive dollar value down further
Absolutely the worst thing any President has done to our USA economy in my lifetime.
I appreciate your comments. You can send them to: John@SteelMarketUpdate.com.
Do you think AK Steel will announce the opening of Ashland next week? Will U.S. Steel (whose CEO was singled out by President Trump) fire up their two blast furnaces at Granite City? Will they finish construction of the EAF at Fairfield in Birmingham?
Will slabs be excluded? If not, will the potential loss of jobs at California Steel, NLMK Farrell, Evraz Oregon and JSW overshadow the jobs gained at USS and AK Steel?
Will the loss of jobs at U.S. ports overshadow the job gains at USS and AK Steel?
Will manufacturing that was considering coming back to the U.S. due to tax law changes now not come because of non-competitive steel prices compared to the rest of the world? What about those companies that have been sitting on the edge (leave U.S./not leave)?
There will be much to discuss at our 2018 SMU Steel Summit Conference. We will have Grant Aldonas, former Undersecretary of Commerce during the Bush Administration, as well as trade attorney Lewis Leibowitz, and much more, at this year’s conference. Go to our website to register: www.SteelMarketUpdate.com/Events/Steel-Summit.
Ferrous scrap traded in Detroit at up $10 on shred and sideways on primes. This was done before the 232 announcement.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
From one group of folks, I’ve heard that Trump might not wait until Feb. 1 – the date he threatened on to place tariffs on China, Canada, and Mexico. They say he could act as soon as Friday. And then there are those who don’t think anything will happen before April 1. That’s the deadline for Commerce, Treasury, and USTR to submit key reports on “America First Trade Policy” to President Trump.
Final Thoughts
Trump made a clarification in a speech on Monday. Previously, he had declared the word “tariff” the most beautiful word in the dictionary. No longer.
Final Thoughts
President Donald Trump on Sunday hammered Colombia with 25% tariffs and threatened to increase them to 50%. Trump in a post on Truth Social said he took the action not because of a trade dispute but because the South American nation had refused to accept planes carrying deported immigrants. The president also cited "national security" concerns, just as he did to justify 25% Section 232 tariffs on steel in his first term. Even the 50% threat echoes his first term. Turkish steel, like that of most nations, was assessed a 25% tariff in March 2018. Trump doubled Turkey's tariff to 50% via a tweet in August of that year over a matter unrelated to steel.
Final Thoughts
We surveyed many of you this week and asked what you wanted to see from the new Trump administration. Responses were varied but fell largely into three groups: tariffs and trade policy, the Nippon-U.S. Steel deal, and those who are concerned about too much government sway in steel. Some also expressed hope that President Trump would continue the infrastructure spending that began under former President Biden.
Final Thoughts
Sometimes new presidential administrations hit the ground running. No time for change like the present. And sometimes new administrations blast off on a SpaceX rocket bound for Mars. There’s a big universe, and we’ve got a lot of flags to plant. Such seems to be the case with the new Trump administration.