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Trump’s steel tariffs impact American manufacturers

But as far as Trump, is concerned, Trade wars are necessary, and they’re easy to win 

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Lots of production and jobs are on the line as the effects of Trump’s metals tariffs work their way down the food chain. Several companies that utilize steel as a primary material for the products they produce are concerned about how these tariffs will impact their competitiveness, their workforce, and their bottom lines.

ABC News reports:

Joel Johnson examines the shipping labels on 35-ton coils of American-made steel that will be unspooled, bent and welded into rounded sections of pipe.

One’s from Nucor, a mill in Arkansas. Another’s from Steel Dynamics in Mississippi. But much harder to spot in the sprawling factory yard is the imported steel that’s put his company in the crosshairs of President Donald Trump’s bitter trade dispute with America’s allies and adversaries.

Trump says his tariffs on steel, aluminum and other goods will put U.S. companies and workers on stronger footing by winding back the clock of globalization with protectionist trade policies. But the steel tariff — essentially a 25 percent tax — may backfire on the very people the president is aiming to help. The Commerce Department has been deluged with requests from 20,000 companies seeking exemptions.

Johnson is the CEO of Borusan Mannesmann Pipe US, a company with Turkish roots that manufactures the welded pipe used by energy companies to pull oil and natural gas out of the earth. He has been fighting an uphill battle to get a two-year exemption from Trump’s tariff on steel imports.

Without a waiver, Johnson said, Borusan faces levies of up to $30 million a year — a staggering sum for a business with plans to expand.

“We don’t have any proof we’re being heard,” Johnson said.

Eighty miles southwest, in Bay City, global steel giant Tenaris also is seeking an exemption from the tariffs. The company churns out steel pipe in a $1.8 billion state-of-the-art facility that began operating late last year, using solid rods of steel called billets that are made in its mills in Mexico, Romania, Italy and Argentina. Of the four, only Argentina has agreed to limit steel shipments to the U.S. in exchange for being spared the tariff.

“The decision is out of our hands,” said Luca Zanotti, president of Tenaris’s U.S. operations, while expressing confidence its request would be approved. If it’s not? “We’ll adapt,” he said.

Steelworkers, meanwhile, are cheering the tariff even as they remain skeptical of Trump’s pledge to empower blue-collar Americans. They also worry about the possibility of too many exemptions.

“You put these tariffs (in place) but now you’re going to exclude everybody so they’re kind of pointless,” said Durwin Royal, president of United Steelworkers’ Local 4134 in Lone Star, Texas.

The diverse views illustrate the complexity, confusion and concern lurking behind Trump’s “America First” pledge.

Pipe mills are numerous in Texas, which leads the country in oil and natural gas production. Factories that use imported steel typically do so when they can’t get the exact type or quantity they need from U.S. producers. Many of them are among the thousands of companies that have filed exclusion requests to avoid being hit by the steel tariff.

Most of them are in the dark, unsure if their applications will be approved as the Commerce Department struggles to process a dramatically higher number of requests than it expected to receive.

A denial may torpedo plans to expand a factory. Or a company may have to lay off employees. The stakes are especially high in Texas: Economists Joseph Francois and Laura Baughman have estimated the Trump steel tariff and separate 10 percent tariff on imported aluminum will trigger the loss of more than 40,000 jobs.

There’s no playbook to guide companies through an exemption process Johnson described as chaotic and unpredictable. He’s hired a lobbyist, former New York Gov. George Pataki. He’s fending off opposition from competitors, including a Tenaris-owned business, who want Borusan’s request denied.

On a sweltering afternoon earlier this month, Johnson assembled dozens of his employees in an air-conditioned room for what amounted to a Hail Mary pass. After lunching on sandwiches from Chick-fil-A, Borusan workers wrote personal messages on oversized postcards to be sent to Trump and other senior officials in Washington and Austin, the Texas capital, pleading for their help in securing the tariff exemption.

“I don’t know what motivates politicians besides votes,” Johnson said. “That’s why we’re doing this crazy exercise.”

———

UNION BLUE

Royal is in his third term as the president of Local 4134.

He and the local’s vice president, Trey Green, are union Democrats in the heart of Trump country. Lone Star is in Morris County, Texas, where Trump received nearly 70 percent of the vote in the 2016 presidential election. Royal and Green initially backed independent Vermont Sen. Bernie Sanders before casting their votes for Democrat Hillary Clinton.

Their union hall is a mile and a half from the U.S. Steel factory that manufactures welded pipe made from metal produced in the company’s mills in Indiana and Illinois. Like the union, U.S. Steel backed Trump’s tariff, declaring that his action would “level the playing field” by blocking other countries from dumping inexpensive steel in the United States. Much of it comes from China.

Although Royal and Green were heartened by the steel tariff, they said they’re under no illusion Trump is a friend to organized labor. Nor are they convinced his tough talk on trade will lead to a rebuilt U.S. steel industry with more and better jobs. Echoing Sanders, they called for a broader strategy to prevent corporations from sending American jobs to low-wage countries.

“I don’t know that putting tariffs on just one or two particular items are going to be the mainstay that helps us in the future,” Green said.

Royal and Green said they’re still waiting for Trump to follow through on his pledge to empower working-class Americans that he said were “forgotten” by Washington.

“So much money is in politics now it’s kind of drowning people like us out,” Royal said. “We’re not going to take (a congressman) to dinner and buy him a new set of golf clubs or give $250,000 toward his campaign. You can tell who’s got the loudest voice there.”

———

COST OF DOING BUSINESS

The Tenaris factory is a massive, modern facility just off the highway leading into Bay City, 21 miles from the Gulf of Mexico. About 640 people work here, but only a handful come into direct contact with the 50,000 tons of pipe the 1.2 million-square-foot factory is able to manufacture each month. The process is almost entirely automated, watched over by employees huddled in front of computer screens.

The company manufactures seam-free pipe typically used in offshore energy production or for transporting highly corrosive gas.

Tenaris began construction of the Bay City plant five years ago, long before anyone anticipated an American president would slap a tariff on steel. Zanotti declined to say how much Tenaris may have to pay, but he downplayed the expense as a cost of doing business on a global scale. Tenaris operates in 16 countries, including Nigeria, which ranks 145 out of 190 countries on the World Bank’s “ease of doing business” index.

“Of course we don’t like it,” Zanotti said of the tariff.

But, he added, “we’re used to dealing with moving parts. This is another moving part.”

The company doesn’t have a registered lobbyist in Washington, let alone an office. But Tenaris has deep pockets and is in the U.S. for the long haul.

Zanotti said the company has spent $8 billion over the last decade to expand its foothold in America, a figure he doesn’t think the Commerce Department should overlook. The investment includes the Bay City factory and the acquisition of the Maverick Tube Corporation, based in Houston. Like Borusan and U.S. Steel, Maverick makes pipe with a welded seam.

“We’re positive we’re going to get a good conclusion,” Zanotti said.

———

LET’S MAKE A DEAL

Johnson said he has a proposition for a president who prides himself on being a master dealmaker.

About 60 percent of Borusan’s welded pipe is manufactured with American-made steel. The rest is shipped from Turkey already in tube form; it’s heat-treated, threaded and inspected in Baytown. Johnson is proposing that Borusan be allowed to bring in 135,000 tons of Turkish pipe each year for the next two years, tariff-free. In return, the company will build a new factory, right next to its existing plant.

That’s a $75 million investment that will allow Borusan to hire 170 new employees, augmenting its existing workforce of 267, according to Johnson. The expanded capacity also will allow Borusan to wean itself from the Turkish imports. He said he’s gotten no reply to his pitch.

The company brought ex-Gov. Pataki, a Republican, on board in March and has paid him $75,000 to drum up support in Washington. But Johnson said he’s unsure if Pataki’s made a difference.

“We’re not politicians. We make pipe,” he said. “We felt like that was a move we had to make because we are so far out of our element.”

Johnson said he had for weeks unsuccessfully sought support from GOP Rep. Brian Babin, whose district includes Baytown. Babin wrote to Commerce Secretary Wilbur Ross on Thursday, expressing his strong support for Borusan’s request and urging Ross to give it “your highest consideration.”

“Finally,” Johnson said.

The Commerce Department has been posting the thousands of requests for tariff exemptions online to allow third parties to offer comments and objections — even competitors who have an interest in seeing a rival’s request denied. Several of them, including U.S. Steel and Tenaris-owned Maverick Tube, objected to Borusan’s bid, saying the Turkish pipe it imports is readily available from American suppliers. They added that Turkey has been cited by the Commerce Department for dumping steel pipe in the U.S.

But Johnson said the objections are aimed at undercutting Borusan. He said no U.S. pipe mill is serious about selling to him because he’d want very detailed information about their products — such as the composition of the steel and a history of customer complaints.

“They just don’t want to see another factory go up here,” Johnson said. “They don’t want to see a competitor grow.”

While American steel manufacturers love Trump’s tariffs, as they help improve their position on the market, it doesn’t bode so well for those manufacturers that have to use steel as a major component of their production. The US just doesn’t produce enough steel to meet the demands of its domestic market, let alone that of markets overseas. For this reason, many American manufacturers will still need to rely on imported steel to meet their production demand, which means that they will be meeting Trump’s tariffs head on, thereby increasing their production costs, which will invariably travel down the food chain to the consumer. That chain of events does not bode quite so well for Americans who depend on these industries for employment, as production cuts and costs could result in employment cuts. But as far as Trump, is concerned, Trade wars are necessary, and they’re easy to win.

 

 

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John C Durham
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John C Durham

You don’t know much about Tariff history in America. For 200 years we would not let products into the country made cheaper than we could make them here. Why? Because everything made cheaper means either it is coming from a nation with a very low standard of living or the product is being dumped because it is surplus product. Maybe how to protect one’s business has been forgotten, but manufacturers that can now point out to the government that product is coming in below the cost of production possible inside the living standards of the U.S. The way its been… Read more »

Brad Isherwood
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Brad Isherwood

Possibly the Tariffs are leverage to move Capital out of hiding and into the Ponzi stock market.
More companies lay off workers,..shudder production/plants…..buy up thier own stock to create the Fake Strong economy that Wallstreet pushes via its controlled media.

After retail Apocalypse in America,…..can the Govs low unemployment numbers be believed?

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BREAKING: Explosion in Crimea, Russia kills many, injuring dozens, terrorism suspected

According to preliminary information, the incident was caused by a gas explosion at a college facility in Kerch, Crimea.

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“We are clarifying the information at the moment. Preliminary figures are 50 injured and 10 dead. Eight ambulance crews are working at the site and air medical services are involved,” the press-service for the Crimean Ministry of Health stated.

Medics announced that at least 50 people were injured in the explosion in Kerch and 25 have already been taken to local hospital with moderate wounds, according to Sputnik.

Local news outlets reported that earlier in the day, students at the college heard a blast and windows of the building were shattered.

Putin Orders that Assistance Be Provided to Victims of Blast in Kerch – Kremlin Spokesman

“The president has instructed the Ministry of Health and the rescue services to take emergency measures to assist victims of this explosion, if necessary, to ensure the urgent transportation of seriously wounded patients to leading medical institutions of Russia, whether in Moscow or other cities,” Kremlin spokesman Dmitriy Peskov said.

The president also expressed his condolences to all those affected by the tragic incident.

Manhunt Underway in Kerch as FSB Specialists Investigate Site of Explosion – National Anti-Terrorist Committee

The site of the blast that rocked a city college in Kerch is being examined by FSB bomb disposal experts and law enforcement agencies are searching for clues that might lead to the arrest of the perpetrators, the National Anti Terrorism Committee said in a statement.

“Acting on orders from the head of the NAC’s local headquarters, FSB, Interior Ministry, Russian Guards and Emergency Ministry units have arrived at the site. The territory around the college has been cordoned off and the people inside the building evacuated… Mine-disposal experts are working at the site and law enforcement specialists are investigating,” the statement said.

Terrorist Act Considered as Possible Cause of Blast in Kerch – Kremlin Spokesman

“The tragic news that comes from Kerch. Explosion. The president was informed … The data on those killed and the number of injured is constantly updated,” Peskov told reporters.

“[The version of a terrorist attack] is being considered,” he said.

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10 percent of American F-22 fighter jets damaged by Hurricane Michael

Part of the reason the F-22’s were left in the path of the storm is that they were broken and too expensive to fix or fly.

Seraphim Hanisch

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Note to the wise: When a hurricane comes, move your planes out of the way. Especially your really expensive F-22 fighter planes. After all, those babies are $339 mil apiece. Got the message?

Apparently the US Air Force didn’t get this message. Or, did they find themselves unable to follow the message?

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The Washington Times reported Tuesday that between 17 and 20 of these top-of-the-line fighter jets were damaged, some beyond the point of repair, when Hurricane Michael slammed ashore on Mexico Beach, Florida, not far from the Tyndall Air Force Base in the same state. The Times reports that more than a dozen of the F-22 Raptor stealth fighter jets were damaged after being left in the path of the extremely fierce storm:

President Trump’s tour Monday of devastation wrought by Hurricane Michael took him close to Florida’s Tyndall Air Force Base, where more than a dozen F-22 Raptor stealth fighter jets were damaged after being left in the path of the powerful storm.

The pricey fighter jets — some possibly damaged beyond repair — were caught in the widespread destruction that took at least 18 lives, flattened homes, downed trees and buckled roads from Florida to Virginia.

The decision to leave roughly $7.5 billion in aircraft in the path of a hurricane raised eyebrows, including among defense analysts who say the Pentagon’s entire high-tech strategy continues to make its fighter jets vulnerable to weather and other mishaps when they are grounded for repairs.

“This becomes sort of a self-defeating cycle where we have $400 million aircraft that can’t fly precisely because they are $400 million aircraft,” said Dan Grazier, a defense fellow at Project on Government Oversight. “If we were buying simpler aircraft then it would be a whole lot easier for the base commander to get these aircraft up and in working order, at least more of them.”

This is quite a statement. The F-22 is held to be the tip of the American air defense sword. A superb airplane (when it works), it can do things no other plane in the world can do. It boasts a radar profile the size of a marble, making it virtually undetectable by enemy radars. It is highly maneuverable with thrust-vectoring built into its engines.

However, to see a report like this is simply stunning. After all, one would expect that the best military equipment ought to be the most reliable as well. 

It appears that Hurricane Michael figuratively and physically blew the lid off any efforts to conceal a problem with these planes, and indeed with the hyper-technological basis for the US air fighting forcesThe Times continues:

Reports on the number of aircraft damaged ranged from 17 to 22 or about 10 percent of the Air Force’s F-22 fleet of 187.

The Air Force stopped buying F-22s, considered the world’s most advanced fighter jets, in 2012. The aircraft is being replaced by the F-35, another high-tech but slightly less-expensive aircraft.

Later in the tour, at an emergency command center in Georgia, Mr. Trump said the damage to the F-22s couldn’t be avoided because the aircraft were grounded and the storm moved quickly.

“We’re going to have a full report. There was some damage, not nearly as bad as we first heard,” he said when asked about the F-22s, which cost about $339 million each.

“I’m always concerned about cost. I don’t like it,” Mr. Trump said.

Still, the president remains a fan of the high-tech fighter jet.

“The F-22 is one of my all-time favorites. It is the most beautiful fighter jet in the world. One of the best,” he said.

The Air Force managed to fly 33 of the F-22s to safety, but maintenance and repair issues kept 22 of the notoriously finicky aircraft on the ground when the powerful storm hit the base.

About 49 percent of the F-22s are out of action at any given time, according to an Air Force report this year.

This is a stunning statistic. This means that of the 187 planes in existence, 90 of them are not working. At their cost, that means that over thirty billion dollars worth of military equipment is sitting around, broken, just in airplanes alone.

As a point of comparison, the entire Russian military budget for 2017 was $61 billion, with that budget producing hypersonic missiles, superb fighter aircraft and tanks. Russian fighter planes are known for being able to take harsh landing and take-off conditions that would cripple the most modern American flying machines.

It would seem that Hurricane Michael exposed a serious problem with the state of readiness of American armed forces. Thankfully that problem did not arise in combat, but it is no less serious.

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Saudi Arabia trying to squirm free of Khashoggi murder (Video)

The Duran Quick Take: Episode 2.

Alex Christoforou

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RT CrossTalk host Peter Lavelle and The Duran’s Alex Christoforou take a quick look at Saudi Arabia’s possible admission to killing journalist Jamal Khashoggi…accidentally, while they were torturing the man inside the consulate in Istanbul.

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Via Zerohedge

Even before the publication of last night’s Saudi trial balloon hinting that the kingdom would soon acknowledge that the extrajudicial killing of Jamal Khashoggi – the insider-turned dissident journalist who walked into the Saudi consulate in Istanbul last week and never walked back out – was the result of a “botched” kidnapping attempt carried out by “rogue killers” (despite reports that the US intelligence community knew that Khashoggi was being “targeted”), two realities had become increasingly clear. One: That the Saudis would avoid responsibility for the killing by pinning it on some unfortunate underling, and two: that there would be few, if any, lasting diplomatic repercussions.

And as more media organizations confirmed reports about Saudi’s plans to spin Khashoggi’s murder as a botched interrogation (we can only imagine what was said in that room to justify the use of such extreme violence), CNN calculated the Secretary of State Mike Pompeo met with Saudi King Salman in Riyadh for approximately 15 minutes early Tuesday, following his 12-hour-plus flight to the kingdom.

US Secretary of State Mike Pompeo’s meeting with King Salman of Saudi Arabia lasted no more than 15 minutes, CNN estimates based on the time the top US diplomat’s motorcade arrived at the royal court and departed.

The motorcade arrived at the royal court at 11:42 a.m. (4:42 a.m. ET) and left 26 minutes later. There is a fair distance to walk from where the motorcade dropped Pompeo off to where he met the king.

While Trump said on Monday that Pompeo would travel to Turkey “if necessary”, the Saudi’s decision to “come clean” about Khashoggi’s death pretty much rendered Pompeo’s fact-finding mission unnecessary.More important are developments in Turkey, where the joint Saudi-Turkish “investigation” is turning its attention toward the home of the Saudi consul, where a black diplomatic van that departed the Saudi consulate just under two hours after Khashoggi entered was captured on camera disappearing into a garage. Some speculate that this is where the killers finished disposing of Khashoggi’s body. This comes after a “nine-hour” search of the Saudi consulate building that, according to leaks published in Al-Jazeera, turned up “evidence of tampering” by the Saudis. On Tuesday, Turkey’s foreign minister clarified that Saudi had yet to admit its role in Khashoggi’s disappearance and probable death.

Turkish investigators will carry out a search of the Saudi Consul General’s residence on Tuesday as the probe into the disappearance of journalist Jamal Khashoggi continues, according to a Turkish diplomatic source.

CCTV footage released to the media from the day the Washington Post writer vanished show movement of vehicles from the consulate building to the Consul General’s residence nearby.

As speculation mounts that the incident could unseat the increasingly authoritarian Crown Prince Mohammad bin Salman (who has already marginalized or incapacitated nearly every threat to his rule), it’s looking more likely that neither the US nor the rest of the Western world will do much to punish the world’s most important oil exporter, which can “weaponize” the oil market seemingly on a whim.

Any punishment for this flagrant violation of human rights will need to come, therefore, from the private sector, which, according to Bloomberg, could sabotage MbS’s grand Vision 2030 plan, which aims to remake the Saudi economy via a flood of foreign direct investment:

The economic strategy of Saudi Crown Prince Mohammad bin Salman, known as MBS, is to make investment the main engine of economic growth instead of government spending, but the disappearance of Saudi journalist Jamal Khashoggi could frustrate these ambitions. Foreign direct investment, a key part of the plan to reinvent Saudi Arabia’s economy, declined sharply in 2017 and is unlikely to return to previous levels, leaving the government’s target for 2020 beyond reach, according to analysis by Bloomberg Economics. Increased policy uncertainty and, after the Khashoggi incident, the risk of reputational damage to foreign companies working in Saudi Arabia won’t help.

 

 

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