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
US rebar producers seek import relief with new trade case
The four countries targeted for duties are currently the top offshore suppliers of rebar to the US market: Algeria, Bulgaria, Egypt, and Vietnam.
CRU Insight: A 50% S232 tariff will raise US steel prices and shift trade flows
This CRU Insight examines how the increase in Section 232 tariffs on steel to challenging levels will lead to significatively higher prices for end consumers in the US market.
Canacero hits out at new US steel tariffs
Mexican steel trade group Canacero has condemned the US’ actions of raising tariffs on steel and aluminum to 50% from 25%.
It’s official: Trump proclamation doubles S232 on imported steel, aluminum to 50%
President Donald Trump on Tuesday evening signed a proclamation that officially doubled Section 232 tariffs on imported steel and aluminum from 25% to 50%. There was one exception: Section 232 tariffs on steel and aluminum from the United Kingdom will remain at 25%, according to a fact sheet published by the White House.
Cliffs CEO cheers higher S232. What’s next for Canada, Mexico, and automotive?
Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves offered full-throated support for Section 232 tariffs on imported steel being doubled to 50%. And the top executive of the Cleveland-based steelmaker said the steel industry wanted to see as few exceptions as possible to the tariffs.