Steel Tariffs a Double-Edged Sword?

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A double-edged metal sword

As domestic prices rise from a tariff on Chinese steel, some worry the lack of cheap metal will weaken the ability for U.S. manufacturers to compete in the global marketplace.

Now the greatest fear we have is that China keeps the cheap steel for itself and makes products that undercut other industries. 1

As cheap imports are curtailed by the U.S. Commerce Department, construction and automotive sectors face higher material prices, leading to thinner margins and higher consumer costs. The domestic supply chain is strained, resulting in lower inventories and longer delivery times. The president of Delaware Steel Co. of Pennsylvania commented on recent price hikes that are, “too much, too fast”.

But not everyone is unhappy with the decision. Following a panel on Chinese overcapacity at the recent Pittsburgh steel conference, the CEOs of Nucor Corp and U.S. Steel gave their perspective.

“Prices are back to where they should be when steel is fairly traded,” said John Ferriola, chief executive of Nucor Corp. Last year, “prices went down because of the dumping,” said Mario Longhi, CEO of U.S. Steel, which last year lost $1.5 billion, closed plants, and laid off thousands of workers.

Ethan Frederick GrantSteel Tariffs a Double-Edged Sword?

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