Arrow-right Camera
The Spokesman-Review Newspaper

The Spokesman-Review Newspaper The Spokesman-Review

Spokane, Washington  Est. May 19, 1883
Partly Cloudy Night 46° Partly Cloudy
News >  Nation

Speculation, uncertainty ripple across Washington after steel import tariffs announced

UPDATED: Sat., March 3, 2018

Steel coils sit on wagons when leaving the thyssenkrupp steel factory in Duisburg, Germany, Friday, March 2, 2018. U.S. Many trade groups fear that President Donald Trump recent announcement of tariffs on steel and aluminum risks sparking a trade war with his closest allies. (Martin Meissner / AP)
Steel coils sit on wagons when leaving the thyssenkrupp steel factory in Duisburg, Germany, Friday, March 2, 2018. U.S. Many trade groups fear that President Donald Trump recent announcement of tariffs on steel and aluminum risks sparking a trade war with his closest allies. (Martin Meissner / AP)

Industry groups expressed concern Friday that a plan to slap large tariffs on steel and aluminum imports could ignite a global trade war, sending shock waves through much of the economy – including Washington’s aerospace and agriculture sectors.

In the short term, however, impacts from the tariffs likely will be limited, and much of the fallout from the decision remains a matter of speculation.

President Donald Trump unveiled the tariffs – 25 percent on steel shipments and 10 percent on aluminum shipments – on Thursday over objections from his pro-trade advisers and from companies that use metal in their products, including automakers and food packagers. The president said the tariffs would go into effect next week.

As a result, American consumers could see modest increases in the price of cars, beer cans and other products. Justin Bucciferro, an associate professor of economics at Eastern Washington University, said the tariffs would be good for domestic steel and aluminum producers, although the broader implications are more troubling.

“The bigger fear, and the reason why markets are panicking, is this could open the door to more tariffs on other goods and potentially services,” Bucciferro said. “And moreover, it could lead to retaliation by other countries who do the same and put tariffs on our exports and hurt domestic producers.”

Trump’s announcement prompted a wave of criticism from other world leaders and American politicians from both parties.

The Chinese Commerce Ministry said it had “grave concerns.” Canada said it would “take responsive measures” if restrictions were imposed on its products. The president of the European Commission pledged the bloc would retaliate with tariffs on American products like Harley-Davidson motorcycles, bourbon and bluejeans.

And U.S. Sen. Ben Sasse, a Nebraska Republican, said in a statement that “kooky 18th-century protectionism will jack up prices on American families.”

Trump indicated the tariffs are a way of responding to the trade practices of Beijing, which has been accused of improperly subsidizing exports and hampering access to its markets in violation of its free-trade commitments. But the tariffs would have a greater impact on Canada, the largest source of steel and aluminum imports to the United States.

Early Friday, Trump took to Twitter to defend himself, asserting that “trade wars are good, and easy to win.”

Wall Street also responded swiftly to the tariff proposal, investing in domestic producers like U.S. Steel and Century Aluminum and selling off shares of companies like Ford, Caterpillar and Boeing, which use steel and aluminum in their vehicles, tractors and jetliners.

Stock of California-headquartered Kaiser Aluminum, which has a rolling mill in Spokane Valley, was up 1.43 percent at the Nasdaq close Thursday. On Friday, it fell 0.84 percent.

Reliant Steel & Aluminum Co., the Los Angeles-based company that owns Haskins Steel Co. in Spokane, also saw little movement, with its stock down 0.87 percent at Friday’s close.

A Kaiser representative said Thursday it was too early to predict how the proposed tariffs would impact the company. It’s not the only local business grappling with uncertainty.

“Everybody’s running around trying to buy steel at the lower prices, worried that it all will be 25 percent more expensive in a week,” said Keith McWalter, senior product manager at Highwood Global, a metal fabricating firm with operations in Spokane and Alberta. “There’s a lot of speculation right now.”

Dean Cameron is the publisher of Northwest Aerospace News, a trade magazine that released its inaugural issue this month. Based in Spokane Valley, Cameron has 27 years of experience in aerospace manufacturing, and he believes the industry – especially giants like Boeing – will simply absorb the added cost of the tariffs.

In the complicated process of building airplanes with parts and materials from all over the world, the tariffs would be a relatively small expense, he said.

“The most important thing to end-user customers is getting their product on time,” he said. “There’s much more of a cost impact for being late on delivery than there is anywhere else on the supply chain. Late delivery is a killer.”

Cameron said manufacturers in the region would survive the tariffs, too.

“We have probably one of the best manufacturing atmospheres around,” he said. “We’re competitive in about every arena, and so I don’t believe that it’s going to have a major impact on the business that people do here.”

Drew Repp, government and regulatory affairs manager at Greater Spokane Incorporated, said the organization is mainly concerned that the tariffs, and any retaliatory actions by foreign governments, could effectively freeze local businesses out of international markets.

If Trump follows through with the tariffs, the fallout could involve any number of products that Americans make, buy and sell.

In a joint statement Thursday, U.S. Wheat Associates and the National Association of Wheat Growers said they “can sympathize” with American metal workers who have been disadvantaged by Chinese trade practices that contribute to global oversupply. However, the wheat organizations said they were “extremely disappointed” by Trump’s announcement.

“We have repeatedly warned that the risks of retaliation and the precedent set by such a policy have serious potential consequences for agriculture,” the organizations said. “It is dismaying that the voices of farmers and many other industries were ignored in favor of an industry that is already among the most protected in the country.”

Those same groups previously lambasted Trump for pulling out of the Trans-Pacific Partnership, a version of which is expected to be signed this month by the leaders of 11 Pacific Rim nations. The pact includes a significant tariff reduction for wheat shipments into Japan, but Japanese buyers will continue paying higher taxes on American wheat, putting growers in Eastern Washington at a competitive disadvantage.

Bucciferro, the EWU professor, said the tariffs would generate “only a few billion dollars,” a relatively small amount given the United States’ gross domestic product of nearly $20 trillion, and it remains to be seen how much of the added costs would be passed on to consumers.

“Broadly speaking, since the U.S. is such a huge country, and we do import so many goods … some of the costs will be incurred by foreign producers, and some of the costs will be incurred by domestic consumers,” he said.

Bucciferro said the North American Free Trade Agreement, which is being renegotiated, stands to have a much larger immediate impact on the American economy.

The Spokesman-Review Newspaper

Local journalism is essential.

Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.

Active Person

Subscribe to the Coronavirus newsletter

Get the day’s latest Coronavirus news delivered to your inbox by subscribing to our newsletter.