Tariffs of 25% on steel imports and 10% on aluminum imposed in 2018 under President Donald Trump and kept in place by the Biden administration were, in part, designed to promote U.S. manufacturing. But have they affected recyclers?
“It’s hard to disentangle just one cause, but certainly rapid price acceleration across the commodities [in 2021], that’s more to do with global supply and demand and supply chain issues than it does with U.S. tariffs in place,” says Joe Pickard, ISRI’s chief economist and director of commodities. “But from a U.S. perspective, it probably did have something to do with the strength that we saw, not just in the price for products, but also in the physical market premiums that consumers have to pay.”
Sam Desai, vice president at South Plainfield, N.J.-based ferrous dealer RM Metals, is an example of flexibility in response to just a few of the challenges over the past four years. “I have struggled with the duties with a reduction of business in 2018, then I created niche items in 2019 to make up for it, only to be hit by COVID in 2020, and then 2021 was a super year due to overdemand,” he says.
Christine Gneiding, trader at Noblesville, Ind.-based metals supplier Intrametco, agrees it is difficult to quantify how tariffs alone have affected business since 2018, citing other factors including logistics, the ongoing COVID pandemic, and general world economics. “Removal of the tariffs, without resolution of the global crisis, would be detrimental to the industry,” she says. “It would make it more difficult for U.S. producers to make investments that, among other things, reduce carbon emissions.”
ISRI has a free and fair trade policy that, while not specific to the steel and aluminum tariffs, recognizes recycling depends upon both healthy manufacturing and access to global markets. ISRI’s position is to:
- Support and facilitate free and fair trade;
- Support trade agreements that encourage free and fair trade;
- Support export and import laws and regulations and encourage them to be consistent with ISRI’s globally accepted specifications;
- Advocate for initiatives that enable the efficient movement of commodities through the global supply chain; and
- Oppose unfair or illegal trade practices.
Pickard points out that although domestic steel manufacturing traditionally has relied on domestic materials, consolidation in the industry could make it a tighter competitive field. “Steel producers are continuing to buy up large ferrous recycling operations,” he explains. “The distinction between what’s good for recyclers and what’s good for steel producers continues to get blurrier.”
The U.S. concluded a deal with the EU in October to allow an undisclosed amount of European-made steel into the U.S. in exchange for the EU dropping some retail tariffs against high-profile American industries. Negotiations with the UK and Japan continue.
While ISRI has not adopted a policy specific to the steel and aluminum tariffs, the association has promoted relief for shredder operators who rely on Chinese-made wear parts to keep their operations moving. The Office of the U.S. Trade Representative (USTR) took public comments in the fourth quarter of 2021 to revive a targeted tariff exclusion process for a specific list of products including shredder wear parts, which are now subject to a 25% tariff. USTR has not indicated when it might issue any exemptions based on comments received.
ISRI senior economist Bret Biggers notes the National Federation of Independent Business, which surveys small business owners, reports that COVID-19 and U.S. tax policy dominate owners’ concerns more than tariffs. “Forty-nine percent of manufacturers said jobs were their No. 1 concern,” he notes. Biggers and Pickard will present a more comprehensive list of issues facing the commodities world at Economic Outlook for 2022: Looking into the Crystal Ball, an online seminar from noon to 1 p.m. EDT, Thursday, Jan. 20. The session is free for ISRI members and $195 for nonmembers. For details visit the virtual events section of ISRI.org.
Photo courtesy of Erwan Hesry on Unsplash.