November 2018

Editor's Notebook

Editor's Notebook

By Joe Hollier

While there have been plenty of companies complaining about the Trump administration tariffs, there are others who have benefited by the trade war tactic. One such company, Weldbend Corporation, recently applauded the administration’s decision to impose additional tariffs on butt weld pipe fittings and carbon steel flanges from China.

Weldbend has seen an increase in profits due to an additional ad valorem tariff of 10% being imposed on imports of butt weld pipe fittings and carbon steel flanges from China. That could increase even further if resolution with China is not reached by the end of the year, as the tariffs will increase to 25% on Jan. 1, 2019. 

Weldbend is a family-owned and operated business that manufactures these products here in the United States. Company President and CEO James Coulas Jr. says, “it is gratifying to see the United States finally take direct and decisive action against these Chinese imports. For generations, Weldbend and its employees have manufactured great products, and we are extremely pleased with the administration’s decision to address China’s unfair trade practices.  This action, along with the recent preliminary decision on Malaysian circumvention, and the inclusion of welded outlets/shaped nipples under the Chinese anti-dumping order, give us great hope that the United States government finally recognizes the threat of China’s cheating.”    

So, while it is true the trade war has been problematic for other segments of corporate America, it is bringing a bit of good fortune to the steel industry. Trump’s metal tariffs have sent steel prices surging and sparked blockbuster profits for steel manufacturers.

Reliance Steel & Aluminum hauled in record sales, thanks to an 18% spike in prices. Nucor recorded the best second quarter in its history, more than doubling its profits, leading Nucor to invest more than $700 million to expand the production capability of Nucor Steel Gallatin, the company’s flat-rolled sheet steel mill located in Ghent, Ky.  This investment will increase the production capability from 1,600,000 tons to approximately 3,000,000 tons annually and will create 70 new full-time jobs. Nucor CEO John Ferriola told analysts, “All in all, we’re very happy with tariffs.”

Steel companies are feasting on a price spike from Trump’s 25% steel tariff. The benchmark price of U.S.-made steel has increased 41% since the start of the year to $917 per short ton, according to S&P Global Platts.  

Still, the tariffs on imported aluminum and steel are disrupting business for other American companies that buy those metals, like Harley-Davidson, General Motors, General Electric and pipeline companies. Hundreds of companies are asking the Commerce Department to exempt them from the 25% steel tariff and the 10% aluminum tariff.

Steel and aluminum-consuming companies also can appeal to the Commerce Department for exemptions, provided they can show they can’t obtain the metals they need from U.S. producers.

Today, Americans continue to find themselves on one side or the other on many divisive issues confronting this country. You can add Trump’s tariffs to that list.