New Steel Taxes Are Hitting the Business Community Hard

The New York Times reports that steel users are unhappy about President Trump’s steel tariffs:

“In a few days, domestic companies raised prices on stainless steel anywhere from 15 to 25 percent,” said Joe Carlson, president of Lakeside Manufacturing, a medical and food service equipment maker in Milwaukee with 175 employees. He is also president of the North American Association of Food Equipment Manufacturers, which represents more than 550 companies. “I’ve been in this business 24 years, and I’ve seen price increases and tariffs,” Mr. Carlson said, “but haven’t seen this combination before.”

The poster boy for steel tariffs in this article is Mark Vaughn, who runs a metal stamping plant in Nashville:

As the year started, he planned to add five or six new machinists in $28-an-hour jobs. His tax bill was going down, he had a fat backlog of orders, and one of his biggest clients, the Swedish appliance manufacturer Electrolux, was planning to invest $250 million to modernize its nearby Springfield plant. But when the administration dangled the prospect of tariffs, Electrolux announced that it was postponing the upgrade, citing concerns about rising steel prices. “This is a message to the administration,” the company said in a statement.

Vaughn Manufacturing’s backlog has dwindled, and Mr. Vaughn said he would probably have to revise price quotes he promised six months ago. Instead of expanding his work force, which he described as “very highly skilled,” he is thinking of cutting five to 10 jobs out of his 50-person staff….“We were probably in line for $2 million to $3 million worth of work” making cooktops for Electrolux, he explained. And as for the new tax cuts, he pointed out, “Tariffs are a tax, so they took that advantage right back out of there.”

Tariffs are a tax! In this case, it’s a tax that people like Mark Vaughn pay directly to American steel companies.

Meanwhile, US Steel plans to invest about $300 million this year in capital projectsless than they spent in both 2016 and 2017. They increased their capital expenditures last year because global prices were rising, but they have no plans to continue that in 2018. And why would they? Tariffs can go away at any moment, after all. You’d be nuts to invest a huge sum in plant expansions that won’t come on line for at least a year, at which time the Trump tariffs might be a distant memory.

So: Steel mills will probably hire a few more people to work extra shifts, but most of the price increase will go straight to the bottom line. This means that steel executives and shareholders will be richly rewarded while users of raw steel, like Mark Vaughn, will lay off workers. And American consumers will pay more for products made of steel. Tell me again how this makes America great again?


Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

payment methods

We Recommend