Trade Cases
Business Forward: Tariffs Causing “Demand Destruction”
Written by Sandy Williams
December 13, 2018
A new American Steel Index report by Business Forward shows U.S. steel prices have risen 7.4 percent since February, while foreign steel prices have fallen 9.8 percent. As a result, American manufacturers are paying 17.2 percent more for hot- and cold-rolled steel than their foreign competitors.
“President Trump’s tariffs on steel and aluminum are increasing consumer prices and hurting American exports,” said Business Forward President Jim Doyle. The long-term costs of tariffs are becoming clear, he added, as production moves overseas and firms cut back on capital investment.
The Section 232 tariffs are intended to reduce steel imports and strengthen U.S. manufacturing. Instead, the opposite effect is occurring as manufacturers switch strategies to importing more finished products from abroad while manufacturing less in the United States. Business Forward refers to this phenomenon as “demand destruction.”
“In order to have great manufacturing, a country or region must have cheap or affordable materials and energy,” said Josh Spoores, Principal Steel Analyst for CRU. “The U.S. has energy, but steel is not cheap. You also will see substitution and once that comes, it is challenging for a switch back.”
Business Forward maintains that the Trump administration’s defense of tariffs by comparing price increases for steel to finished product prices is wrong. “They should compare price increases with a manufacturer’s profit margin,” says Doyle. Higher steel prices are increasing input costs and negatively impacting profits for U.S. manufacturing firms.
Business Forward describes itself as a civic-minded, bipartisan advisory organization that works with business leaders across the country to advise Washington on how to create jobs and accelerate the economy.
Sandy Williams
Read more from Sandy WilliamsLatest in Trade Cases
Global steel forum sets 2026 framework deadline as US ups pressure on excess capacity
Global steelmakers sounded the alarm Friday over the deepening excess steelmaking capacity crisis. Ministers at the Global Forum on Steel Excess Capacity (GFSEC) in Gqeberha, South Africa, pledged to...
CRU: China’s indirect steel exports find new destination markets
The boom in China’s direct steel exports has not stopped this year, even with a rise in protectionist measures globally. The increase is driven by...
U.S. Steel sues Algoma over iron pellet shipments
U.S. Steel is suing Algoma over the Canadian flat-rolled producer's rejection of iron pellet shipments, arguing it has breached its contract.
US and Canada expect positive outcomes from tariff negotiations
Canadian Prime Minister Mark Carney and US President Donald Trump told reporters at the White House on Tuesday that they’ll be formulating a trade deal that works for both nations.
Leibowitz: When the shutdown should end
There is no doubt that the current government shutdown reflects the vast divisions between the extremes of American politics, society, and even geography. Almost all Americans agree that government is necessary, but voters disagree...