Trade Cases

Tennessee Steel Fabricators Plead Case for Rescinding Tariffs

Written by Sandy Williams

A letter last week from Tennessee manufacturers to Washington asks President Trump to consider the unintended consequences of Section 232 tariffs on steel-consuming companies.

The group of six Dickinson Country manufacturers said they employ over 1,000 workers and depend on competitively priced steel to fabricate products that compete in a global marketplace.

“We respectfully ask that you rescind the Section 232 tariffs on imported steel and help put our companies back on a level playing field,” said the group in a letter prepared by the Dickinson Chamber of Commerce. “We cannot compete globally when the cost of our most important input has spiked and delivery times are extended.” 

“Today, our companies are facing a rapid increase in steel costs that threatens our ability to compete. All steel prices, whether produced domestically or imported, are the highest they have been since 2008 and 43% higher than this time last year. Domestic steel prices are 68% higher than the average world export price and 88% higher than steel costs in China. We find it difficult to pass on these cost increases either due to contractual obligations or competitive pressures. Even where we can pass on price increases, we face the clear long-term risk of losing market share to lower priced foreign competition, who do not face government-imposed import restrictions which artificially drive up steel costs. Foreign competitors have strategic material cost advantages and their manufactured products freely flow into the U.S. with little or no tariffs.

“All of us source our steel from domestic steel mills and share your interest in maintaining a strong steel industry. Fortunately, the U.S. steel mills are financially quite strong. In 2017, before the tariffs went into effect, the U.S. steel industries had their best financial year since 2008. Moreover, their earnings in 2018 far exceed last year. Unfortunately, companies like ours that consume steel are facing significant headwinds. The 25% tariffs are effective in reducing the flow of raw steel crossing our boarders into the U.S., but result in the importation of steel components and finished goods in their stead. This not only will negatively impact our companies, but also U.S. consumers who will be faced with higher prices. Ultimately, the domestic steel mills will feel the consequences as their customer base shrinks.”

The letter concludes:

“We urge you to consider the unintended consequences of the tariffs. The situation that steel-consuming companies are facing in Dickson County is indicative of hundreds of counties across the U.S. The damage caused by the steel tariffs will manifest itself over time as supply chains realign, and this damage will not be easily undone.” 

The letter was signed by executives from A-1 Signs, Nashville Wire Products Mfg., Onward Manufacturing Co., Stinson Steel, Tennsco and Truform Manufacturing.

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