Steel and Aluminum Tariff Announcement Sparks Outcry from Washington and Business Leaders

March 2nd, 2018

 

On Thursday President Trump declared that he will be imposing unprecedented tariffs on steel and aluminum imports as early as next week. According to President Trump, imports of steel to the United States will be subject to a 25 percent tariff and imports of aluminum will face a 10 percent tariff. Tariffs or quotas on fundamental economic goods like steel and aluminum would hurt far more sectors of the economy and their workers than they would help. These measures would also increase the cost of goods for American consumers on nearly everything from cans of beer to automobiles. Furthermore, if tariffs are adopted, we can surely expect our trading partners to respond with countervailing duties that will target key sectors of the U.S. economy.

The announcement from the White House caught many lawmakers and business leaders by surprise, sparking widespread condemnation. Below are just some of the voices that have come out firmly against this action:

Government Officials

Senate Finance Committee Chairman Orrin Hatch (R-UT) released a statement on the tariffs, “Tariffs on steel and aluminum are a tax hike the American people don’t need and can’t afford. I encourage the president to carefully consider all of the implications of raising the cost of steel and aluminum on American manufacturers and consumers…”

Senator Lamar Alexander (R-TN) tweeted against the tariff announcement twice stating, “Targeted measures against countries that don’t play by the rules, such as China, could help American workers. Broad tariffs against steel and aluminum imports will raise prices on consumers and hurt American workers.”

Senator Jerry Moran (R-KS) stated to Roll Call the following, “I said this during the tax debate. I said it to my colleagues and said it to the administration, which is: I’m a supporter of the tax changes or tax reductions, but you will significantly damage or you’ll significantly reduce the benefits that come from any tax bill if you undermine the ability to earn a living…Tax cuts only are helpful to people who are earning a living, who have income. And trade is how we gain income.”

Senator Jeff Flake (R-AZ) tweeted against the tariff announcement multiple times stating, “I know they say history repeats itself, but this seems a little fast #tbt” and linking to a 2003 Washington Post article, “Steel Tariffs Appear to Have Backfired on Bush.”

Senate Republican Conference Chair Sen. John Thune (R-SD) stated, “We are going to have some conversations about that, about what we can do to shape this…I don’t know what that would look like at the moment…” when discussing congressional oversight of unilateral trade action by the Trump Administration.

Senator Ron Johnson (R-WI) called the announcement “concerning” stating, “The president’s announcement that he plans to levy higher taxes on materials that Wisconsin’s manufacturers and consumers purchase is concerning. I plan to work with my colleagues and the administration to ensure fair, robust trade policies that protect our state’s workers and consumers…

Senator Pat Toomey (R-PA) stated “Changing course from this approach by invoking national security as a means of imposing new, huge tariffs on all kinds of imported steel is a big mistake that will increase costs on American consumers, cost our country jobs, and invite retaliation from other countries…”

Senator Mike Lee (R- UT) released a statement against the tariffs “While I am sympathetic to the issues facing domestic steel manufacturers, there must be a better way to address the steel industries concerns, and I hope Congress and the executive branch can identify an alternative solution before these tariffs are finalized next week…”

Senator Roy Blunt (R-MO) stated, “My advice was…that you’ve gotta be careful here, you get into a tariff war…So I would prefer that this was not where we were.

Senator Ben Sasse (R-NE) expressed indignation, saying, “You’d expect a policy this bad from a leftist administration, not from a supposedly Republican one.”

Secretary of Defense James Mattis said in a memo that he was concerned about the “negative impact on our key allies” of the recommended options and called for more “targeted tariffs.

A spokesman for House Speaker Paul Ryan (R-WI) stated, “The speaker is hoping the president will consider the unintended consequences of this idea and look at other approaches before moving forward.”

A spokesman for House Speaker Paul Ryan (R-WI) reiterated this call on Monday, sayingWe are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.

Representative Bill Pascrell (D-NJ) told reporters in response to the tariffs announcement, “We don’t have a major trade deficit with Canada. What are we doing? If you look at all the products that are coming into the United States from Canada and Mexico, this is an ally. If we can’t make an exception there, then how are we going to get a NAFTA deal?

Senator Dan Sullivan (R-AK) told POLITICO that “The approach taken right now seems to be splitting our allies apart. The focus needs to be on where the problem is. To me the problem is the overcapacity that has been almost entirely in China. I think it’s an opportunity to get with our allies to address the problem of overcapacity in China.

Representative Charlie Dent (R-PA) statedI have serious reservations with the actions announced by President Trump today. While I acknowledge unfair trade practices by some foreign countries in the targeted industries, it seems this order is too broad and will likely cost more American manufacturing jobs than the number of jobs the Administration is attempting to protect. I strongly urge the President to rethink this misguided policy that will raise taxes, add costs, and have considerable negative impacts on American consumers, workers and the economy.

Representative Kevin Brady (R-TX) said, “What I’m urging him to do is narrow this. Make sure you’re exempting fairly traded products. Grandfather existing contracts, so there’s no disruption…We want to make sure these fairly traded products are not caught up in this blanket tariff. And, again, tariffs are taxes. So, lower is always better. Zero is the best.

Business Community

Miller Coors, a beer producer, tweeted against President Trump’s measures three times, stating that “We buy as much domestic can sheet aluminum as is available, however, there simply isn’t enough supply to satisfy the demands of American beverage makers like us. American workers and American consumers will suffer as a result of this misguided tariff.”

Steve Handschuh, head of the Motor Equipment Manufacturers Association, also declared to the Journal that, “Tariffs limit access to necessary specialty products, raise the cost of motor vehicles to consumers, and impair the industry’s ability to compete in the global marketplace…

Roy Hardy, the president of the Precision Metalforming Association, which represents metalworking companies, said to the New York Times that tariffs would imperil “the U.S. manufacturing sector, and particularly downstream U.S. steel and aluminum consuming companies.” He also argued that companies that use steel to make their products employ many times more Americans than the domestic steel industry.

Rufus Yerxa, president of the National Foreign Trade Council, declared to the Financial Times that “These massive tariff hikes will raise costs for many crucial American industries — autos, machinery, construction, energy and many others. These are huge sectors, and the negative impact will far outweigh any benefits…”

Robert Budway, president of the Can Manufacturers Institute stated, “Aluminum and steel play a vital role in nourishing American families and in employing tens of thousands of workers across the country. Tariff restrictions will have severe economic impact on the can manufacturing industry and its employees. This recommendation could have a ripple affect across the supply chain. Even a small increase in the price of raw materials would create a destructive competitive disadvantage, forcing possible closures of can manufacturing plants in the United States and negatively impacting the 10,000 workers and their families in these U.S.-based plants. One could easily foresee where finished cans or even cans with food products made overseas could be imported at lower costs than U.S. produced cans.

Han Quach, vice president of international trade of the Retail Industry Leaders Association said, “Today’s announcement that the Trump Administration intends to unilaterally impose tariffs on steel and aluminum imports could have severely negative consequences for the American economy. If broadly applied, these tariffs will have a downstream impact on every sector, and will raise the stakes for other countries to take retaliatory measures that will hurt America’s exporters.

Jan Hatzius, chief economist of the Goldman Sachs Group Inc., said in memo to clients that “This is likely to escalate trade tensions, particularly as it looks likely to apply to a broad group of countries including to some allies of the U.S. expect further disruptive trade developments over the coming months, including stalled NAFTA [North American Free Trade Agreement] negotiations and potential restrictions on Chinese trade and investment.

American Chemistry Council released a statement encouraging President Trump against imposing unilateral tariffs, statingWe urge President Trump to reconsider imposing these costly tariffs and punishing the very businesses that are helping him grow the economy and create jobs. Chemical companies can’t grow as quickly or deliver the same innovative and affordable products if the facilities where those products are made suddenly become costly to build or maintain. With robust, market-opening free trade agreements in place, the U.S. chemical industry is poised to create significant growth and new jobs and help President Trump deliver the kind of economy that Americans deserve. An increase in both tariff and trade barriers is not the solution.

Jeff Beckman, a spokesman for Hershey Company, saidSuch a broad and sweeping order could have a negative impact on the entire U.S. economy, potentially costing U.S. jobs and ultimately, hurting American consumers through higher prices for everyday products.

Greg Hardman, president and CEO of Christian Moerlein Brewing Co., saidUnfortunately these tariffs will ultimately affect everyone. The cost structure of the aluminum cans and ends will be affected, but we don’t know to what extent yet. These tariffs are across the board and apply to all users of cans, not just brewers.

Bob Pease, president and CEO of The Brewers Association, also spoke out against the tariffs, statingThe Brewers Association strongly opposes the imposition of tariffs on imported cansheet aluminum and cautions against any action that would result in increased prices for small and independent brewers and their customers.

A coalition of 34 beverage producers sent a letter to President Trump warning against aluminum tariffs, writingAny import restrictions or tariffs on these products will add hundreds of millions in costs for companies in the food and beverage industry and will detrimentally affect over 82,000 American manufacturing jobs in industries that rely on these products. Finally, we are concerned that any import restriction on these types of aluminum will result in retaliatory action by other countries on American exports – such as American scrap metal and American agricultural products.

CLNG released a statement saying “We are concerned that the Administration’s plan to impose tariffs on steel could have the unintended effect of endangering much-needed U.S. LNG export projects. These projects benefit the economy, create jobs, improve our trade deficit and provide global environmental benefits. The Administration had taken meaningful steps to improve the current permit review process for natural gas infrastructure and it would be unfortunate if their steel tariffs created new and different barriers to projects.”

LNG Allies wrote a letter to the President on March 1, 2018 that stated “We write today to raise serious concerns regarding the imposition of tariffs on steel imports to the United States under Sec. 232 of the Trade Expansion Act of 1962. Implementation of such tariffs could do great harm to the LNG industry, a central pillar of your “Energy Dominance” agenda. Accordingly, we urge you to define national security in a way that does not include steel that is vital to the U.S. oil and gas industry in general and U.S. LNG exporters in particular. The U.S. LNG export industry relies on steel imports for critical structural and other components of its facilities, including certain types of steel for which there is no U.S. manufacturer or very limited U.S. capacity.”

Greg Armstrong, CEO of Plains All American Pipeline, told the CERAWeek energy conference “We buy not only pipe, but valves and things not manufactured in the U.S. We don’t think it would be appropriate to put a tariff on something you can’t buy in the United States.

Andy Black, CEO of the Association of Oil Pipe Lines (AOPL), statedWe are urging the administration to avoid killing U.S. jobs through a steel tariff that impacts pipelines.

18 U.S. agriculture groups sent a letter to Secretary Ross warning against steel and aluminum tariffs, statingU.S. agriculture is highly dependent on exports, which means it is particularly vulnerable to retaliation. Many countries that export steel to the United States are also large importers of U.S. agriculture products. The potential for retaliation from these trading partners is very real. Short of explicit retaliation, these countries may also stall efforts to resolve current trade issues if they believe they have been unfairly targeted over legitimately traded products.

Jack Gerard, CEO and president of the American Petroleum Institute stated, “The actions taken today are inconsistent with the Administration’s goal of continuing the energy renaissance and building world class infrastructure. The U.S. oil and natural gas industry, in particular, relies on specialty steel for many of its projects that most U.S. steelmakers don’t supply.

Joshua Bolten, CEO and president of the Business Roundtable commented, Business Roundtable strongly disagrees with today’s announcement because it will hurt the U.S. economy and American companies, workers and consumers by raising prices and resulting in foreign retaliation against U.S. exporters. Using ‘national security’ tools to implement tariffs could embolden other countries to impose ‘national security’ tariffs on U.S. exporters or otherwise restrict U.S. goods and services sold to their markets.

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