Fear and Loathing in America

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Fear-and-Loathing 

Today the US Department of Commerce will advance its plans to levy Section 232 tariffs on imports of automobiles and automobile parts by holding a public hearing. Automobile imports and auto labour standards were reportedly part of the reason the new North American Free Trade Agreement was scuppered, shortly before the imposition of 232 tariffs on steel and aluminium imports.

 

This is in light of news that US steel producers look set to announce blockbuster second-quarter earnings, with many crediting price increases caused by Section 232. Here at UK Steel we have watched prices of steel products in the US increase from between 12 and 26% since the start of the year. However one US giant, Valmont Industries (one of the world's leading providers of engineered products and services for infrastructure, and irrigation equipment for agriculture), reported that its sales have been challenged by "...uncertainty around impacts of tariffs and trade policies.”

 

Last week the US Senate passed a bill 88-11 asking for an increased role in President Donald Trump's 232 national security tariffs. Although this is seen as largely a symbolic measure, it outlines the level of concern of mainstream American politicians regarding Trump’s protectionist tendencies. Section 232 was the first gunfire in a trade war; something that Trump feels he can easily win.

 

When attending the G7 last month, he told America’s closest allies that they were “robbing” the “piggy bank”. The piggy bank being America. As he left the summit early to meet Kim Jong-un, he said of the G7, “If they retaliate, they’re making a mistake.”

 

However, this is not a view supported by David N Taylor, President and CEO of the Pennsylvania Manufacturers’ Association. This week he featured on a BBC R4 programme called ‘Trump and Trade’ saying, “A cogent American leadership should use America’s economic strength in support of our values, our interests and our allies and we have manifestly failed to do that.”

 

Furthermore, two top Republican lawmakers have issued fresh warnings to President Donald Trump and hinted they could make legislative attempts to reign in his trade fights. Sen. Orrin Hatch, the Republican chairman of the Senate Finance Committee, has previously expressed concerns about the damaging effects of Trump's tariffs on the US economy. He took the warnings a step further on Tuesday by suggesting that legislation may be needed to prevent further escalation.

 

"If the administration continues forward with its misguided and reckless reliance on tariffs, I will work to advance trade legislation to curtail presidential trade authority," Hatch said during a speech on the Senate floor. "I am discussing legislative options with colleagues both on and off the Finance Committee and I will continue to do so."

 

While most Republicans have expressed concern with the tariffs, many have stopped short of suggesting a legislative response to their party's president. But given recent news about the detrimental impact of the tariffs on US companies like Valmont Industries and (more famously) Harley-Davidson, the tide may be finally shifting in Congress.

Author

Director, UK Steel

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