Steel And Pipe CEO Thinks Tariffs Won't Reduce Imports

- Apr 04, 2018-

Matt Crocker, CEO of Steel and Pipe Supply, said he doesn’t think steel tariffs will have the desired effect of reducing imports.

President Donald Trump established tariffs Thursday on steel and aluminum imports. The taxes are set at 25 percent on steel and 10 percent on aluminum, effective March 23. Trump’s intended goal is to strengthen the domestic steel and aluminum industry. Crocker said the company believes quotas on imported steel rather than a blanket tariff would have a more stabilizing effect. He said imports historically represent about 20 percent of steel consumed in the U.S. “The goal of reducing the imports I don’t think will be successful taking this track,” he said. “What will happen is the price of steel in the U.S. will increase because of the tariffs.” The Trade Partnership, a consulting firm, predicted that the tariffs would result in a net loss of nearly 146,000 jobs.

According to its report, U.S. iron, steel and aluminum employment would increase by 33,464 jobs, but the rest of the economy would lose 179,334 jobs. In addition to this, opponents are concerned about how the potential retaliation against U.S. exports could affect the trade market. Steel and Pipe, headquartered in Manhattan, also has service centers in Kansas City, St. Louis, Tulsa, Oklahoma, Longview, Texas, and Houston as well as a facility in Monterrey, Mexico. The company’s customer base deals with “structural steel” such as agriculture manufacturing, warehouses and buildings. The tariffs currently exclude Canada and Mexico.

“It would have been much more impactful if those countries where included in the tariff,” Crocker said. “Canada and Mexico are pretty critical partners for the United States in steel supply. That would have been our biggest worry.”

Crocker said Steel and Pipe Supply gets 95 percent of its steel from domestic sources.

“Short-run, it’s actually a good thing because we carry inventory, and the value of our inventory has gone up,” he said. “Once we are in a position where we have to replenish those inventories, we’re like others who are going to be paying higher prices for steel.”

The tariffs will have their biggest effect on Steel and Pipe’s Houston operation because that market is heavily influenced by imports through the Port of Houston.

He said steel imports have been down since the 2016 presidential election because of Trump’s comments about implementing tariffs.

“In the short run, there will be a shortage of steel available,” he said. “Ultimately, our view is that things will adjust. It might take three or four months, but the steel will begin to flow back in the United States whether it’s because of the exemptions or people adjust their prices.”

The news is quoted from "The Mercury" .