Steel tariffs will harm Trump's 'America First' agenda

Steel tariffs will harm Trump's 'America First' agenda
© Getty Images

Months have now passed since the announced deadline from the Trump administration to make a move on steel tariffs, and we are yet to hear whether we’re any closer to a decision. But rather than further delay, American industry and its partners need certainty, and this proposal should be rejected.

Early indications from the administration suggest tariffs on international steel imports could be raised by as high as 20 or even 25 percent in order to put “America first." Yet this move, for which unsatisfactory explanations have been offered by proponents, would not only damage international relations, but also threaten the livelihoods of the very workers it’s supposedly intended to protect. 

ADVERTISEMENT

It is undeniable that certain American industries have suffered at the hands of globalization. However, it is too easy to point to overseas operations as the root of all problems without understanding that international allies are part of the solution, too. 

 

The Turkish steel industry is one such ally. Turkey, in addition to being one of the fastest growing economies in the world, is also one of the fastest growing sources of international investment into America. Protectionist actions do not encourage further investment and job creation in America, they drive both away.

With materials such as steel, already fundamental to jobs and growth in both countries, it is not possible for the negative impact of such tariffs to be felt on one side alone. 

Furthermore, not all global steel products are the same. Turkish manufacturers are specialists in "long steel" products as well as line pipes for oil and gas transmission, which have proved to be incredibly important to major energy projects in America. 

Thirty-two percent, or 1.6 million tons annually, of the U.S. long steel imports originate in Turkey. In the big picture, despite how the numbers may sound, this is only a small piece of the overall steel trade, but it provides an essential element to major American projects.

New pipelines providing natural gas to millions of homes via projects such as the NGL Pipeline in Pennsylvania and the Elba Express in Georgia are made possible by the quality and experience of Turkish producers.

A stated reason for the tariffs is that steel imports supposedly threaten American security. This couldn’t be further from reality. Turkish companies contribute to the U.S. economy by creating jobs, thereby helping to build stability and strength.

Taking just one example, the Turkish firm Borusan invested $150 million in the U.S. in 2014 alone, generating hundreds of jobs and playing a vital role in the federal and regional economies, supporting steelworkers and their families across America. 

Tariffs like these, on the other hand, have been shown to actually cost jobs. 

The Bush administration’s 2002 steel tariff — a 25-percent increase — provides a telling example. The policy lasted less than two years before being abandoned, although not before provoking international repercussions and harming the U.S. economy.

Ultimately, the administration dropped the tariff before the World Trade Organization was forced to rule on it. This should be a red flag to the Trump administration: Both China and the European Union have already indicated that the proposed tariffs are not compliant with WTO rules and have hinted at retaliation. 

If American jobs are the No. 1 priority, this is not the way to win.

The danger of tariffs of this nature is that the supply of steel being imported from countries like Turkey — the type of steel not readily available in the U.S. — is likely to be delayed or cut off, imperiling major infrastructure projects that are being planned or already underway.

What's more, for every single steel-specific job in America, there are 60 jobs in steel-using industries. Imagine the consequences. Again, the 2002 tariff serves as a lesson, looking specifically at Ohio and Michigan as case studies. Those states lost 10,553 and 9,829 jobs,respectively, as a result of the tariff, making them among hardest-hit states.

In a recent opinion piece, President Trump’s former campaign manager, Corey Lewandowski, encouraged his former boss to impose the tariffs, saying that he had met many steelworkers on the campaign trail, and that he remains “optimistic” that the president will act “on his promise of putting American workers first." Yet all the evidence shows that this move will do the exact opposite.

So, perhaps it’s worthwhile to lift the veil on this debate before past mistakes are repeated. Despite the rhetoric and the various narratives that have been put forth, there is only one true target of these blanket tariffs: China.

Cheap Chinese steel has flooded the market in volumes the world has never before experienced and, globally, steel industries have struggled as a result. But it is in this very context that continuing strong trading bonds between America and its business allies, like Turkey, is most essential.

Shutting out responsible, value-adding partners through self-destructive steel tariffs is not the way to go. Collectively, we can ensure that the world’s steel trade operates fairly and in the interests of all of our markets — and in the interest of American workers.

Agah Uğur is the CEO of Borusan Group, a conglomerate operating in steel, distribution, logistics and energy sectors. Borusan is a major FDI investor to the United States and has a multi-million dollar investment in Houston, TX. He is the Turkey-U.S. Business Council Texas Committee chairman.