Kuehl Talks 232 at FMA Annual Meeting
By Jonathan Samples
on Mar 14, 2018
When the Fabricators and Manufacturers Association kicked off its annual meeting last week in Scottsdale, Ariz., the White House had not yet made official proposed Section 232 tariffs on steel and aluminum imports. Still, the then-pending presidential actions were a major topic for discussion and among the first orders of business at FMA’s yearly gathering.
During his opening presentation on economic trends, FMA Economic Analyst Chris Kuehl spent much of his time on Section 232, including the potential costs and benefits of the tariffs. Kuehl, who is also managing director at Armada Corporate Intelligence, said the announcement from President Trump that he intended to place a 25 percent tariff on steel and a 10 percent tariff on aluminum earlier in the month was a surprise.
“Doing the broad, all the way across-the-board tariff on every country that produces steel, was the exception,” he said. “Nobody really expected this.”
Trump certified those intentions when he officially signed off on the tariffs, with noted exceptions for Mexico and Canada. Other exemptions may be forthcoming.
“The actions we’re taking today are not a matter of choice, they’re a matter of necessity for our security,” Trump said March 8 at the White House. “A strong steel and aluminum industry are vital. These industries have been targeted for years and years, decades, in fact. That’s going to stop. Now, we’re finally taking actions to correct this long overdue problem.”
Kuehl admits that the many of the problems facing the domestic steel industry are not of its own doing, but called the tariffs a “ham-handed” way of addressing them. Ultimately, he sees markets such as agricultural machinery and public sector construction being adversely affected by the new tariffs, while he expects the automotive industry will avoid costly ramifications.
Similarly, Kuehl is not too worried about threats of potential trade retaliations from some affected countries. “Trade war is possible but it’s likely to be more sound than fury,” he said. “Countries don’t want to upset their trade relations, particularly if there are some exemptions being thrown around.”
As for the countries that could be exempt, the president initially said he would “hold off the tariff” on Canada and Mexico, adding that it could serve as leverage in the ongoing NAFTA negotiations. Trump also said his administration would determine additional exemptions in the coming weeks.
“If the same goals can be accomplished by other means, America will remain open to modifying or removing the tariffs for individual nations, as long as we can agree on a way to ensure that their products no longer threaten our security,” he said.