Industry leaders in Alabama are sharing anxiety as the Trump administration’s trade war with China continues to make a local impact. While Alabama steel producers appear to be doing well under the steel tariffs, farmers and automakers are worried their industries will be worse-off.
“I will candidly say that I’m troubled by what I perceive to be the growing trade war,” said Senator Doug Jones. “What is our line? What is our line between free trade and fair trade?”
Jones was one among many who attended a field roundtable of the Senate Committee on Homeland Security and Governmental Affairs in Mobile, AL on Monday, November 19. The committee met to discuss the impacts of the steel tariffs and trade policy.
A group of panelists including representatives of two steelmakers, four automakers, and farmers was invited to the committee meeting. Although the tariffs on steel and aluminum have benefited U.S. steelmakers, the costs for steel customers such as automakers have increased.
Alabama’s farmers, especially soybean farmers, have also been facing lower demand and lower prices because of the retaliatory tariffs imposed by China.
“These tariffs directly affect our way of life,” said Daniel Penry, a farmer from Baldwin County. “Our business is a national security issue as well. We need steel in this country to fight the wars and make whatever we need to protect ourselves, but good luck eating it.”
Many U.S. companies depend on affordable steel to maintain their prices. For instance, approximately 41,000 ATVs were sold to U.S. customers between January and March 2017 and there are up to 17 million shipping containers in global circulation. Higher manufacturing costs due to increased steel costs could increase the prices of these two popular products and negatively affect demand.
Automakers are also worried that a Department of Commerce investigation could potentially result in heavy tariffs on important auto parts, which could hurt international supply chains and domestically-manufactured vehicles. The Asia-Pacific alone currently ranks as the fastest growing market for industrial brakes and clutches.
Brent Sansing, plant manager and representative for U.S. Steel’s Fairfield Works tubular production, and Mike Lee, the vice president and representative of Nucor Steel’s mill in Decatur, both stated that the steel tariffs have righted imbalances in global steel production.
“Our industry has endured years of unfair trade,” said Lee. The U.S. is one of the top steel-producing industries around the globe and employs more than 142,000 people. Lee says foreign steel producers unfairly sold their steel in American markets at lower prices.
“This endless game of Whack-a-Mole threatened to undermine the entire U.S. steel industry and our nation’s national security until this administration recognized a more comprehensive approach was needed,” said Lee. “The president got it right.”
“The ongoing trade dispute with China is a top concern because China is our largest export market,” said Rick Clementz, the representative and general counsel for Mercedes-Benz U.S. International.
Robert Burns, the vice president for Human Resources and Administration at Hyundai Motor Manufacturing Alabama, and Allyson Edwards, the assistant division manager for Honda Manufacturing of Alabama, both said that the supply chains and pipelines in the auto industry take years to develop and years to change.
Auto tariffs, Burns said, could destroy international supply chains that could take decades to create. “It is impossible to change the supply lines overnight,” he said.
Where steelmakers, automakers, and farmers agree is that a trade war could provoke a potential economic downturn.
“It continues to spook everybody,” said David Fernandes, president of Toyota Motor Manufacturing Alabama. “There’s no sight of when this thing ends.”