Proposed Tariffs and Kentucky's Steel and Aluminum Industries

Feb 26, 2018

Credit wkyt.com

The Ohio Valley’s steel and aluminum industries are closely watching what the Trump administration will do on imports. The Department of Commerce has suggested a massive 24 percent global tariff on steel and aluminum imports. Candidate Donald Trump promised to crack down on imports. Now, it’s unclear if President Trump will follow through. Becca Schimmel spoke to people in regional industries that could win or lose if tariffs take effect.

Steel coils are loaded and prepared to become part of products from auto transmissions to knitting needles to that little piece of steel you roll your thumb on in a lighter. This is Bilstein Cold Rolled Steel in Bowling Green, Kentucky and it just opened last year. The new company is among some signs of life in the Ohio Valley’s steel and aluminum industries after years of decline.

For 20 years Martin Dofka was a steelworker at Wheeling-Pittsburgh Steel in West Virginia. A Trump supporter, Dofka says foreign companies have an unfair advantage because they don’t have to comply with the regulations American companies do. 

“They don’t play by the same rules, there’s no way for the American companies to, I would call it, competitively compete with them.” 

Dofka isn’t against environmental or work safety regulations -- he thinks they’re important. He says tariffs would help make global trade more fair.

Century Aluminum, the country’s largest premium aluminum producer, cut production at its Hawesville, Kentucky facility by more than half in 2015. Executive Vice President Jesse Gary blames subsidized imports which forced prices down. He says if the commerce department’s recommendations are implemented Century will be able to bring that smelter back to full capacity and bring back 350 jobs that pay an average of 90-thousand dollars a year.

“The truth about the aluminum industry is the U.S. is one of the few aluminum producing regions in the world that actually doesn’t already have tariffs on primary aluminum.”

Gary says Kentucky is already the largest producer of aluminum in the country, and it soon could be producing more. Braidy Industries is building the first new aluminum mill in the U.S. in decades. Braidy CEO Craig Bouchard supports the tariff recommendations.

“So if companies are facing tariffs as they import here and they want to continue to import here as many of them do, they’ll consider making capital expenditures here, creating jobs and being part of our community.”

Kentucky taxpayers also have a lot riding on Braidy. The company got a 15-million dollar investment from state government, and another 12 million in tax incentives. Bouchard says some countries should be excluded from the tariff if they are good trading partners. And as for concerns that the tariffs could trigger a trade war…

"Never shy of fighting a war with a good cause and always want to be a winner."

But economist Brian Strow warns that other regional industries could suffer. Strow works at Western Kentucky University and is also a Republican candidate for the Kentucky House of Representatives.

He notes that the European Union has said it will place tariffs on Bourbon from Senate Majority Leader Mitch McConnell’s state to maximize the political pain. 
 

Aerospace Industries -- with major exporting companies in Kentucky and Ohio -- are concerned tariffs will damage relations with client countries. 
And then there’s the auto industry -- a major employer in the region -- which Strow says needs imported steel. 

“It’ll result in a net loss of U.S. jobs which is not I think what President Trump is wanting to happen but it’s the law of unintended consequences.”

But not everyone in the auto industry agrees.

“I think we need to level the playing field.” 

That’s Jack Bowers, vice president of the United Auto Workers local in Bowling Green, Kentucky. He has first hand experience with auto plants closing. He put in 15 years at a General Motors plant in Michigan before it closed. He says it’s a hard thing to watch. 
JB: “When you work with somebody they’re part of your family, they become part of it because you spend a lot of time with them. You hate seeing them go out the door … there’s a chance they won’t ever be called back.” 

Bowers says he’s not a fan of President Trump, but he supports imposing tariffs on steel and aluminum. Like Wheeling steelworker Martin Dofka, Bowers wants foreign companies to meet similar labor and environment standards.

“I mean you want to be competitive but there’s only one earth.” 

Bowers thinks America’s consuming power will help it ride out a trade war and drive more domestic production -- Something most economists doubt. Those on both sides of the tariff debate will be watching eagerly for a final decision from the White House, which is due by mid April.