Final Thoughts
Final Thoughts
Written by John Packard
September 6, 2019
Steel Market Update will produce our Service Center Inventories and Shipments “Flash Report” on flat rolled and plate steels for data providers on Monday, Sept. 9.
Also on Monday, we will begin our early September flat rolled and plate steel market trends analysis. On Friday, we will provide data providers with a link to a very extensive PowerPoint presentation covering many of the questions asked in a historical perspective.
If your company would like to participate in either of these programs, please contact us at: info@SteelMarketUpdate.com
If your company buys fabricated steel parts from China, or for that matter elsewhere in the world, you need to pay attention to the Fabricated Structural Steel anti-dumping case, which we reported on last Thursday and Lewis Leibowitz writes about in today’s issue of SMU. As you look at the history of the Department of Commerce, especially since the Trump administration came to power, the trend has been constant – moving the bar a little higher with each case. As Leibowitz states in his article, what exactly is “fabricated structural steel” and what prevents a product, such as an elevator, being included in the DOC definition? How much longer do you think it will be before air-conditioning units, furnaces, metal building parts, toaster ovens, coffee makers all come under the scrutiny of the Department of Commerce?
I recall having a discussion with my neighbor prior to President Trump taking office. His company manufacturers the large heaters you see at football stadiums across the country. His factory is located in China, and I told him he had better prepare for a challenge from the U.S. government. Last week he approached me asking for help in getting an exclusion on his products, which were part of the first wave of tariffs, the ones that just went to 25 percent. He told me the profits of his company shrunk by 50 percent as they absorbed the 10 percent tariffs. Since his competition is in South Korea, and thus not subject to the Section 301 tariffs, they do not have to worry about 10 percent or 25 percent tariffs.
Failure to win exclusions on this product could put this company out of business (and they do have manufacturing plants in the U.S. that make other products).
If the goal of the Trump administration is to reshore manufacturing to the United States – when do the self-initiated antidumping claims end? It looks like those who are asking for relief are getting it, no matter the cost.
I don’t have an opinion as to whether my neighbor’s company should survive or be extinguished by the tariffs. After all, they were warned. They had time to cut a deal with a manufacturing operation outside of China. They were non-believers. They were also non-believers that the tariffs would last a full year or that they would go up to 25 percent. They bet wrong.
At our 2019 SMU Steel Summit Conference, 53 percent of those responding to our real-time polling chose President Trump over any Democrat or third-party candidate for president in 2020. I know it is still early, but our conference attendees did accurately predict the election of Trump in August 2016.
I was watching Fareed Zakaria on CNN this morning. He was speaking about the fundamental change in the politics in England due to those who support Brexit and those who are against it. There are supporters in both the Labor and Conservative parties. However, the actions of Boris Johnson have clearly taken the Conservatives as the party in favor of Brexit.
Here in the United States, the battle is over globalism vs. nationalism. As in England, there are supporters of nationalism (stronger borders, fewer immigrants, tariffs) among both the Democrats and the Republicans. The Republicans of old were for free trade, but under Trump that is no longer the case. I can hear the complaints that the Republicans are for “free and fair trade” (whatever that means). I guess we all are. The problem is in the details. What is free and fair trade? Does a billion dollars of state aid to have a steel mill or manufacturing plant built in their state constitute government support of private industry?
I have struggled to figure out an answer to that question that works for everyone. Maybe you have as well?
I would love to hear what readers think about the two subjects I have raised this evening:
- Do companies that bring in manufactured (or partially fabricated) parts from China or elsewhere have to worry about those products being hit with antidumping complaints due to the foreign steel content, or for other reasons?
- What exactly is “free and fair trade” and how do we segregate out public support for private industry?
You can reach me at John@SteelMarketUpdate.com
As always, your business is truly appreciated by all of us at Steel Market Update.
John Packard, President & CEO
John Packard
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