The Trump administration announced new tariffs on imported steel and aluminum on Thursday, despite resistance from the United States oil industry, Republicans leaders in Congress, and key international trading partners, according to a report by the Washington Post.
“We’ll be imposing tariffs on steel imports and tariffs on aluminum imports,” the President said, announcing the measures personally from the White House. “…You will have protection for the first time in a long while, and you’re going to regrow your industries.”
The Dow Jones industrial average fell by 586 points, or 2 points, on Thursday as investors factored in the cost of the tariffs on their existing businesses.
The oil industry’s main concern? The burden that it will place on companies that use pipelines. Refineries and petrochemical plants also rely largely on steel. For now, that reliance is on cheap, imported steel.
“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,” Charlie Riedl, executive director of the Center for Liquefied Natural Gas. Other outspoken opponents of the tariff was the American Petroleum Institute.
The Commerce Department earlier released a report saying rising imports of steel threatened national security. Trump used an obscure provision of existing trade laws to enact the tariffs, which are expected to be challenged in international courts in the coming months.
Automakers and other manufacturers had advised Trump against the tariffs, warning that higher prices would hurt sales and lead to layoffs nationwide. The Bush administration was the last to enact steal tariffs, which allegedly led to 200,000 job losses in 2002.
“I continue to be concerned about what other countries do in response to that,” Senator Roy Blunt of Missouri said regarding the measures. “In our state, we make steel and aluminum, but we continue to buy a lot more than we make. Things like sheet aluminum that you use to make boats with, we make a lot of boats, it’s not available in the United States.”
The existing trade tax code taxes 169 types of steel products that are imported for manufacturing purposes on a daily basis. The new measures are slated to pit steel jobs against other manufacturing jobs.
“Import taxes on steel and aluminum will raise the prices of those products, which in turn will raise the price of doing business for U.S. manufacturers,” said economist Christine McDaniel of George Mason University’s Mercatus Center. “There are more people in U.S. manufacturing sectors that rely on steel than there are in the U.S. steel industry. In terms of the economics, the trade-off does not make sense.”
By Zainab Calcuttawala for Oilprice.com