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Kallanish Kallanish

Knowledge matters Knowledge matters

June, 26th 2019

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JAN 08

Steel players weigh in on Trump trade moves


US steel players are divided on the general effectiveness of President Donald Trump’s steel policies. The one-year anniversary of his 232 tariff initiative is approaching and the president prepares to address the nation on his proposed $5 billion steel southern border wall.

The US Department of Commerce began its investigation into the national security merit of steel imports on 11 January last year, President Trump scheduled an address for late Tuesday night on the border wall situation and its attendant government shutdown, Kallanish notes.

The divide between domestic steel players largely follows the line between traders – who primarily deal with import material – and service centres which source most of their steel domestically.

“[... The 232] caused prices to rise and made [... mills] a lot of money, but it did nothing to solve the long-term issue of China’s overcapacity,” says one trader. “It also twisted the 232 law on its head, and it should not have been done.”

A Midwest flats buyer who sources from both foreign and domestic sources says ahead of President Trump’s address that its implications will be far-reaching for steel on several fronts.

“The wall, if built, will be made of steel, meaning larger backlogs at the mills and more projects for steel fabricators throughout the country,” he says. “The economy would get a boost and many more jobs would be added, including many peripheral jobs.”

A southern border wall would be symbolic of the trade actions already in place, he adds. He argues nevertheless that the trade wall between Mexico, Canada and the US ought never to have been built at all.

“Trump needs to eliminate those tariffs and open up both borders as soon as possible,” he says. “Trump's impact has been significant for the steel industry as a whole - it is very strong with record profits. The future looks very bright and helps out economy in so many ways, plus protecting our national security for the long term.”