Analysis
November 7, 2024
Final Thoughts
Written by Ethan Bernard
With the US presidential election decided, ‘wait and see’ has quickly turned into ‘we’re about to find out.’ Following Donald Trump’s victory, I had a chance to sit down with Kevin Dempsey, president and CEO of the American Iron and Steel Institute (AISI). He gave his thoughts on what he thought we might see in Trump’s second term in office, and what it means for steel.
Big picture
Dempsey said Trump’s victory “in some ways, it doubles down on the importance of trade enforcement. I think there’s no doubt that President Trump will be aggressive on trade enforcement.”
He cited Trump’s legacies from his first term in office such as Section 232 and 301 tariffs.
Additionally, Dempsey said many of the people who could serve in the Trump administration are very familiar with the steel industry. “So I think steel’s priorities will be front and center and a key part of the policy.”
Beyond that, Dempsey expects a strong tax bill next year that will promote investment in the American manufacturing industry “as the original tax bill done under President Trump in 2017 did.”
Government regulations, Inflation Reduction Act?
Where Dempsey sees a big shift from the Biden administration is regulation, especially in the environmental area.
“The current administration has proposed a number of fairly stringent, costly, new mandates on industry through regulation,” Dempsey said. “I think there’ll be much greater focus on working with industry to ensure that we pursue regulations in a way that does not undermine industrial competitiveness.”
Another key policy initiative of the Biden administration was the Inflation Reduction Act. Will it continue?
“It is very difficult to say in terms of changing a statute,” Dempsey said, “because that requires not only the president but also who runs the House and the Senate.
(As of Thursday there were still several undecided House and Senate races.)
Dempsey said there’s a good chance that both houses will be Republican, “but getting the votes to make significant changes in the IRA may be challenging—especially on the tax credit side—given that a lot of the Inflation Reduction Act provisions really benefit Republican districts.”
It’s not just what regulations exist, but sometimes the lack of them that determines an administration’s approach.
For instance, Dempsey said, “The focus on decarbonization in the US has been an industry-led effort that wasn’t driven by government mandate.”
“I think the steel industry is going to continue to pursue efforts to reduce emissions, reduce energy consumption, be more efficient, and produce the products our customers need,” Dempsey added. “And that will be driven by the market, not by government policy.”
USMCA, China
The USMCA Agreement is up for review in 2026. Of course, it was the first Trump administration that put it into effect on July 1, 2020.
“I think there will be a very serious review and consideration of whether changes need to be made to make it still make sense,” Dempsey said.
He cited trans-shipment as a key issue to focus on in North America, especially as a result of Chinese overcapacity.
“China’s steel consumption has been dropping for the last several years, while their production continues at record levels,” Dempsey said. “And they’re now trying to export their way out of it.”
“Mexico is one of many places where it’s going, and then some of it gets converted and comes here,” he added.
Regarding that excess capacity, Dempsey remarked “I think we know that President Trump and his team will be aggressive in trying to work to address that.”
More broadly, Dempsey said US government policy should be about getting other governments out of the business of “trying to put a finger on the scale and let market forces work.”
“And we’re confident that where market forces are truly allowed to work, the US industry will be very successful,” Dempsey concluded.
