Final Thoughts

This particular Tariff Week, if it lives up to its hype, promises to be the most consequential day for US trade policy in a generation. Will it deliver as promised or instead deliver more confusion and uncertainty?

Mixed opinions

Domestic mills have mostly praised Trump’s tariff policies. So has United Auto Workers (UAW) union President Shawn Fain. Talk about unusual bedfellows!

Meanwhile, the United Steelworkers (USW) union opposes tariffs on Canada because it represents both US and Canadian steelworkers.

But other sectors and many economic experts have been more critical. Even US automakers are less than enthusiastic about a measure that is in theory designed to help them in the way that Section 232 helped domestic steelmakers.

What comes next?

There is a lot of uncertainty around what the automotive tariffs might look like. Wiley trade attorney Alan Price has a good column on what to expect here. I’d say it’s required reading for the week ahead whether you’re for the auto tariffs, against them, or on the fence.

And of course we’re back to handicapping IEEPA on Canada and Mexico. That’s become a monthly ritual since Trump’s inauguration.

Will Canada really get hit with IEEPA 25% tariffs this time in addition to Section 232 tariffs? Will Canadian Prime Minister Mark Carney’s confrontational approach stave off new tariffs? Or Could Mexico’s (to date) less confrontational approach see better results? Or will the IEEPA can get kicked down the road (again) and into early May?

Then there is the question of what other sectors might be hit with tariffs. Tariffs on pharmaceuticals might not have much impact on steel. But if lumber – especially Canadian lumber – is hit with tariffs, it would almost certainly drive up building costs, which could put a damper on steel demand.

And Trump is now threatening “secondary” tariffs not only on countries that import Venezuelan oil but also on those that import Russian oil. It remains murky to me how exactly those measures will be applied and enforced. In the meantime, it’s clear that Trump’s tariff policies and the uncertainty they’ve created are rattling stock markets and ordinary people alike.

Bumpy Q1

The first quarter has seen US stocks pummeled along with the US dollar. Gold – a safe-haven investment – has seen its best quarter since 1986, according to Reuters. Consumer confidence, meanwhile, has fallen to its lowest level since January 2021, per AP. (Related to that: Inflation rose in February.)

On the steel side, hot-rolled coil prices appear to have peaked and might be on their way down. And momentum suddenly slowed in HR futures as well.

The jury remains out on whether tariffs will eventually result in new domestic automaking capacity. And we already know Cleveland-Cliffs will be idling steelmaking operations in Dearborn, Mich., because of weak auto production.

As I’ve noted before, on balance, taking down the Dearborn furnace will result in less steel production. Cliffs will ramp up the C6 furnace in Cleveland to offset the idling of Dearborn. But C6 is smaller than the sole furnace operating in Dearborn.

You’d think less production would, on balance, lead to higher steel prices. But that’s not what we’ve seen so far.

Sentiment on tariffs souring?

Sentiment among our readers about tariffs appears to have shifted. Take a look at our last edition of “Market Chatter” – which SMU pulls directly from the comments our readers submit to us in our surveys.

By the numbers, 37% think Trump’s tariffs will help their business. An equal percentage say tariffs are hurting business. And the balance are unsure of the impact. Simple math tells you 63% have a negative or neutral view of the tariffs.

And, again, we see that reflected in the comments that we’re receiving. There has been a shift over the last month or so. There was initially a lot of enthusiasm around the perceived pro-business and pro-manufacturing tilt of the Trump administration.

People expected lower taxes, fewer regulations, and more protections not only for mills but also for downstream industries. I don’t want to say that the tide has turned completely on tariffs. We’re not seeing much outright anger. But I think it’s fair to say that their chaotic rollout has sparked concerns and renewed anxieties about demand.

The next round of indicators could be key

Also, looping back to consumer confidence, I know some of you will say that we shouldn’t read too much into the “vibes”. Consumer confidence was very negative in January 2021, even as it was abundantly clear that prices were shooting up and lead times stretching out on pent-up demand.

I’m curious to see what economic data released in April will say about March. Because it should give us a better idea of whether the constant headlines about tariffs (have we a day without one?) are helping or hurting the overall economy.

What isn’t a potential national security threat?

I sometimes wonder whether the courts will ever provide a formal definition of what constitutes a threat to US national security.

President Trump has used “national security” to justify everything from tariffs to immigration crackdowns. You could make the case that he is simply using the tools at his disposal to get the job done.

Even so, it’s maybe getting a little silly now.

USW President David McCall called Big River Steel – U.S. Steel’s non-union, EAF mill in Arkansas – a national security threat, according to an article last week in Bloomberg. Yep. You read that right. Someone representing workers at one division of a US steelmaker called another division of that same US steelmaker a threat to US national security.

Where does it end: If you don’t like this column, am I national security threat? And could tariffs be applied to SMU as a result? (That was an attempt at an early April Fool’s joke. We still have jokes, right?)

SMU Community Chat

SMU is happy to host a Community Chat with Algoma CEO Michael Garcia on Wednesday, April 9, at 11 am ET.

We’ll talk about everything from the Canadian steelmaker’s transition to EAF steelmaking to the impact of trade tensions between the US and one of its closest allies.

The webinar is free for anyone to attend. A recording will be available only to SMU members. You can register here.