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Home » Who Likes Tariffs? Some U.S. Industries Are Eager for Them.

Who Likes Tariffs? Some U.S. Industries Are Eager for Them.

March 10, 20257 Mins Read Business
Who Likes Tariffs? Some U.S. Industries Are Eager for Them.
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The United States buys more steel from Canada than from any other country, and those imports will become much more expensive under tariffs President Trump intends to impose this week.

That’s good news to Stephen Capone, president of Capone Iron Corporation of Rowley, Mass., which makes steel stairs, handrails, gratings and other products and has around 100 employees. For too long, he said, Canadian competitors have been flooding the New England market with cheap steel products, preventing his and other local companies from winning business.

“No matter how low we bid, they can underbid us on any job,” Mr. Capone said, “They’re decimating our market.”

Many companies oppose Mr. Trump’s tariffs, fearing that they will push up costs and provoke retaliation against their products by other countries. Ford Motor’s chief executive, Jim Farley, said last month that tariffs could “blow a hole” in the U.S. auto industry, and retailers have warned that they will lead to higher prices for consumers.

But there are deep pockets of support for his trade policies in the business world, particularly among executives who say their industries have been harmed by unfair trade.

In particular, the leaders of American steel and aluminum companies have long contended that foreign rivals undercut them because those rivals benefit from subsidies and other government support. And they say that tariffs, when imposed without loopholes, have been effective at spurring more investment in the United States.

Mr. Trump on Thursday suspended broad tariffs that he had imposed two days earlier on imports from Canada and Mexico. But tariffs on steel and aluminum products, authorized under a national security provision called Section 232 of the Trade Expansion Act, are scheduled to take effect on Wednesday.

“President Trump was elected with a resounding mandate to level the playing field for American manufacturers and workers using tariffs, and he is committed to delivering on that mandate — including for our keystone steel and aluminum industries,” Kush Desai, a White House spokesman, said in a statement.

The tariffs apply a 25 percent levy on steel and aluminum imports from Canada, Mexico and other countries.

In his first administration, Mr. Trump imposed Section 232 tariffs on steel and aluminum, but Mexico and Canada gained exemptions from them when a new trade agreement among those countries and the United States took effect in 2020.

Jesse Gary, chief executive of Century Aluminum, an American aluminum producer, supported the aluminum tariffs during Mr. Trump’s first term, but said the exemptions had made them less effective, and was glad to see them being reimposed.

“The new tariffs will close those loopholes back up and enable us to begin investing again, and bring on more production here in the U.S.,” he said.

Philip Bell, president of the Steel Manufacturers Association, an American trade group, said there had been a surge of steel imports in recent years. He said Mexican companies were importing cheap steel from China, making slight alterations and exporting it to the United States as if it were produced in Mexico.

The Biden administration moved last year to stop the practice by applying a 25 percent tariff on Mexican steel that was melted or poured outside of North America before being turned into a finished product. Mr. Trump’s tariffs go further by applying to all steel from Mexico.

“The president is sending a clear message to our trading partners that it’s time to get serious about their trading relationships with the United States,” Mr. Bell said.

Canadian steel companies reject accusations that they are breaking trade rules.

“Our members are deeply committed to a North American steel market that is protected from unfair trade practices, and we do not contribute to global overcapacity with our production levels remaining below Canada’s steel demand,” Catherine Cobden, president of the Canadian Steel Producers Association, a trade group, said in a statement.

While the tariffs could enable U.S. steel and aluminum manufacturers to take a bigger share of the domestic market, the question is whether they make the large investments needed to expand capacity.

Steel companies did so after the tariffs of the first Trump administration. Timna Tanners, a managing director at Wolfe Research covering metals companies, said U.S. companies could add enough capacity to replace imported steel in many markets. But, she added, fear of a creating a glut might temper their plans.

“The mills don’t seem to want to run that hard because they also think that could pressure prices lower, and they’d rather enjoy higher prices,” Ms. Tanners said.

Last year, imports of finished steel accounted for about 23 percent of the market, according to the American Iron and Steel Institute. The United States is far more dependent on imports of aluminum.

American smelters used to dominate the production of primary aluminum — aluminum derived from raw materials rather than from recycling — but today China makes far more than any other country. The Commerce Department found that the United States imported 90 percent of its primary aluminum in 2016.

The Economic Policy Institute, a left-leaning think tank, credited the Section 232 tariffs of Mr. Trump’s first administration for somewhat reviving the primary aluminum industry.

Century, the largest producer of primary aluminum in the United States, plans to build a new aluminum smelting plant, the first in the United States in 45 years. It aims to do so with a grant of up to $500 million that was awarded by the Biden administration using funds from the Inflation Reduction Act and the infrastructure investment act. Century must still obtain significant additional financing to build the plant. And the Trump administration is reviewing grants made under the Inflation Reduction Act.

Asked whether the review puts the plans at risk, Mr. Gary said, “We think the new project altogether fits exactly the sort of investment that this administration wants to do,” adding that building the plant could create 5,500 jobs and that operating it would require 1,000 full-time workers.

Still, the U.S. aluminum industry is divided on Mr. Trump’s latest tariffs, in large part because American companies have plants in Canada that would be hit by the levies. Charles Johnson, the president of the Aluminum Association, a trade group, said on LinkedIn last month that, while he supported some aspects of the Section 232 tariffs, the United States needed “a reliable source of metal from Canada to support the jobs and investments happening today.”

If tariffs push up the prices of steel and aluminum, companies using the metals in their products may pass the extra costs on to consumers — or find substitutes.

Unions also support Mr. Trump’s tariffs but have at times objected to how he has imposed them. The United Steelworkers union has criticized his targeting of Canada, where it has over 225,000 members, saying the steel trade with Canada is fair.

“We call on the president, moving forward, to differentiate between trade cheaters and trusted allies that reliably work with us to advance our national and economic security,” David McCall, international president of the United Steelworkers, said in a statement.

Mr. Capone, the Massachusetts steel executive, wants Mr. Trump’s steel tariffs to be even tougher. They exempt steel imports from Canada from tariffs if the Canadian company is fabricating steel made in American mills. He said much more labor was involved in fabricating the steel — turning it into products like stairs and grating — than in manufacturing it, and said that should be reflected in the tariffs.

“The 232 tariffs favor the mills, not the fabricators,” Mr. Capone said.

Aluminum Customs (Tariff) Donald J Fees and Rates) International Trade and World Market Prices (Fares Protectionism (Trade) Steel and Iron Trump United States Economy United States Politics and Government
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