Final Thoughts

Section 232 derivative tariffs in flux

Trade attorney Lewis Leibowitz shares his thoughts on the matter here. Leibowitz spoke on stage at Tampa with Alan Price, a veteran trade attorney at Wiley who also writes a column for SMU.

Price will write his next column for us next week. I’m guessing he’ll have a different take. Assuming, that is, we’re not talking by then about a Supreme Court ruling on another set of tariffs – President Trump’s International Emergency Economic Powers Act (IEEPA) tariffs.

Recall the Supreme Court returns from its winter recess later this month, and so a potential ruling on the fate of the IEEPA tariffs (aka “reciprocal” or “Liberation Day” tariffs) could come then.

USMCA in a post “51st state” world

Speaking of tariffs and international relations, I enjoyed the frank discussion between Steel Manufacturers Association (SMA) President and CEO, Philip Bell, and Canadian Steel Producers Association (CSPA) President and CEO, Catherine Cobden, on USMCA, Section 232, and the US-Canada relationship in general.

The two sides have much in common. Concerns about global overcapacity and electricity availability, for example. Even so, there was some chatter along the sidelines of Tampa about whether tensions between the US and Canada could result in USMCA becoming USM.

Reflecting that reality, audience members asked about the impact of President Trump calling Canada the 51st state. They also asked about the impact of Canadian Prime Minister Mark Carney’s comments at Davos, which angered the Trump administration.

Bell suggested not reading too much into such remarks. “The 51st state comment doesn’t really get us anywhere,” he said. “But keep in mind, we’re dealing with politicians. And politicians need to get votes. And to get votes, they often say things on global stages that appeal to their voters and really have nothing to do with serious negotiations like USMCA.”

Cobden said she hoped the US and Canada could reach an agreement on USMCA. But she added, “hope is not a strategy”. And, in a moment of heartfelt candor, stressed how long-lasting the damage from some of Trump’s comments might be.

Canadians have “lost faith” in the US in no small part because of comments from US leadership – and even though many people have family and friends on both sides of the border. “It puts our governments in a very difficult place to find pathways to move forward,” she said.

Despite that, business finds a way

And yet another theme at Tampa Steel this year was how business manages to find a way – despite continued uncertainty around trade policy and the apparent unwinding of the post-WWII order.

There seemed to be a good deal of optimism around demand going forward. There was also chatter of more import competition, especially with US steel prices high and lead times stretched.

You could look at that as a zero-sum gain and denounce imports. You could also see it as companies having the confidence to go out and make larger buys for the longer term.

And that’s not to mention the blockbuster M&A we’ve seen from companies who have apparently decided to look past current uncertainty and invest in the future. Also, as some of the analysts who spoke at Tampa noted, domestic mills are flush with cash – so don’t expect the M&A trend to end.

Worthington Steel and Kloeckner optimistic

Just look at all the cross-border deals that have been announced, or that might be in the works. Worthington Steel’s acquisition of Germany’s Kloeckner, for example.

Worthington Steel President and CEO Geoff Gilmore and Kloeckner Metals CEO John Ganem, who shared the stage, stressed the many ways in which the companies could contribute to one another.

Sure, Kloeckner trades on a German stock exchange. But 80% of its shipments are in the US. “So, truly, it’s become more and more of a North American company,” Gilmore said.

Audience members asked repeatedly if Worthington Steel might look to sell Kloeckner’s European business. Gilmore gave no indication of any such plans. “Europe, that’s a light touch,” he said. “There’s very little overlap there. I think we will provide a lot of autonomy for the leaders in place to continue to run those businesses and those strategies.”

Ganem, meanwhile, noted while there were similarities between Kloeckner’s businesses in the US and those of Worthington Steel’s, there were few points of “overlap.”

Yes, both operate flat-rolled service centers. But there are key differences. “We’re much more heavily focused in the South. And I think product lines, product mixes are different – and really the industry segments that we serve are different,” Ganem said. “It’s really all about expanding the footprint and the capabilities.”

JSW Steel USA resilient

Another example of candor: JSW Steel USA CEO Rob Simon acknowledged the company had lost approximately two weeks of production at its mill in Mingo Junction, Ohio, because the unprecedented cold that swept through the area resulted in damage to the mill and an expansion project.

The company had initially feared the outage could last much longer than two weeks. Simon said it was a testament to an entire team – workers, management, and equipment suppliers – the facility was already back up and running.

He also acknowledged that, in the past, JSW Steel – one of the largest steelmakers in the world and JSW Steel USA’s parent company – had considered selling its US subsidiary in part out of frustration with its management team. Simon hinted that such concerns had passed. And that JSW was now more focused on investing in and expanding its US operations.

One example of that? Sajjan Jindal, the billionaire managing director of JSW, regularly visits both Mingo Junction and JSW Steel USA’s mill in Baytown, Texas – the kind of blue-collar places billionaires don’t usually frequent.

Zekelman leans toward a nuclear-powered boat

And of course it’s always great to catch up with Barry Zekelman, executive chairman and CEO of Zekelman Industries – and also a billionaire. Our conversation – and many of those on stage at Tampa – was too broad to give justice to in one column here.

Here are a few points that stuck with me. Zekelman is a staunch supporter of Section 232 and of Trump, broadly speaking. But he has in the past criticized the derivative tariffs, and he reiterated some of those criticisms – and potential fixes – at Tampa. So maybe the news of potential changes to the downstream tariffs shouldn’t have come as a surprise?

Meanwhile, Zekelman appeared to put to bed the idea that he would die unhappy if he never bought a steel mill. Yes, he continues to hold a minority stake in Algoma. But expanding that to ownership of the mill doesn’t appear likely. From a practical standpoint, he indicated, Zekelman Industries’ operational footprint is too broad to be served by any one mill, and in particular one in Canada.

Zekelman and I also discussed the potential for nuclear power to solve some of the energy issues bedeviling the US as manufacturing and AI compete for electricity. He thinks a combination of deregulation and technological advancement will bring nuclear technology mainstream faster than people realize.

He also noted he was a “boat guy”. And that already nuclear-powered yachts were becoming available. Was he more likely to buy a mill or a nuclear-powered boat? The boat, he said. The reason? It’s important to work hard. “But sometimes you want to put your feet in the sand,” he added.

Steel Summit!

I second that. Make sure to budget time for the sand and the sun. I’ll also add this: maybe also set aside some budget for a political scientist or a geopolitical risk consultant to advise your company.

Because, yes, I enjoyed getting away from the cold and into the Florida winter sun for a few days with all of you. But, unfortunately, it doesn’t look like the post-WWII order is going to snap back in place any time soon.

Speaking of which, I think geopolitics might be a good panel for Steel Summit on Aug. 24-26 in Atlanta. (You can register here.) But I’m getting ahead of myself. In the meantime, thanks, again, to everyone who attended Tampa Steel. And thanks, too, to all of you for your continued support of SMU.