SMU Community Chat: Leibowitz talks trade, tariffs, and changing world order

Questions from the audience abounded in the Q&A session, so thank you to everyone who tuned in and asked questions.

Below are some highlights from the discussion. SMU subscribers can watch a replay of the full conversation on our website.

SMU’s Community Chat calendar is filling up with what should be some really good discussions in the coming months. Our next chat is with crowd favorite Timna Tanners, managing director at Wolfe Research, on Wed., Nov. 13. You can register here.

Coated steel trade case

The coated steel trade case filed this year is broad in scope, even targeting USMCA trading partners Canada and Mexico. Leibowitz said this is most likely “an attempt to avoid a piecemeal reaction.” The case takes aim at all the top countries sending the most coated sheet to the US market. So if successful, there shouldn’t be too many other places to find coated sheet – except from domestic sources.

While massive trade cases like this have had an immediate effect on steel prices in the past, Leibowitz said this case hasn’t really impacted prices much because supply and demand are the real drivers of prices.

Leibowitz said the dumping margins for Canada will likely not be trade-disabling, as Canadian steel companies are experienced in handling cases like this. The impact on Mexico is less clear.

“There was a time when the US, Canada, and Mexico didn’t hit each other with these cases, and that lasted 10 or 15 years,” he commented. “But this is one where they have chosen to go outside that box, and we’ll see how it goes.”

He predicted the case will most likely encounter timeline extensions due to the complexity of the investigation. The current case timeline can be found here.

The election and global instability

Leibowitz said the results of Tuesday’s election should relieve some short-term uncertainty, though the final outcome may not be known for some time.

Regardless of the winner, both major parties favor restricted trade, so he believes the fundamental approach to trade policy is unlikely to change dramatically.

Broader instability around the world is a more significant concern impacting the business environment, with issues like Russia’s war in Ukraine, tensions with China, and changing global dynamics.

“The world order is in danger of collapsing. Iran, Russia, North Korea, and China are all interested in remaking the world order,” he said. The world’s situation looks “uncertain and perhaps violent” and will certainly affect business in the US, he noted.

“There is an overt challenge to the global order that’s prevailed since World War II. And I think it’s a real concern,” he stated. “Trade and economics depend on peace, and we may not have peace, at least not for a while.”

Tariffs

Commenting on tariffs, Leibowitz said both a Trump and a Harris administration would likely favor some sort of trade restrictions and tariffs, though the specific approaches may differ.

A Harris administration “would be more likely to maintain the current tariff regime, including Section 232 and Section 301 tariffs,” he predicted.

A second Trump term, meanwhile, could bring the possibility of more blanket tariffs but would likely face questions on their legality and be challenged in court, he said.

“It’s pretty clear that if across-the-board tariffs are imposed like that, it will impact consumers. And they’ll be the ones largely paying the tariffs and not the producer,” he added.

Trump handled the USMCA negotiations in 2019-20. If re-elected, he could push for further changes or scrap it altogether.

SMU thanks Lewis for joining us for this Community Chat. The conversation touched on so much more, so be sure to check out the replay on our website.