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How a steel border wall - and the shutdown it caused - impacts the steel industry

Written by Lucy Perkins/WESA | Jan 18, 2019 3:27 PM
Edgar Thomson steelworks.JPG

The Edgar Thomson steelworks in Braddock, PA is the only mill left in the Pittsburgh region that's capable of turning raw iron ore into finished steel. (Lucy Perkins/WESA)

(Pittsburgh) -- At the center of the government shutdown is President Trump's proposal for a steel border wall. Trump pitched it as a big opportunity for steel companies.

"Listen, I build a wall, and the wall is built out of steel instead of concrete, I think people will like that," Trump said earlier this month. "And here's the other good thing, I'll have it done by the U.S. Steel corporation - by companies in our country that are now powerful, great companies again - and they've become powerful over the last two years because of me and because of our trade policies."

But while the President's proposal promises growth for the industry, steel is caught in the shutdown too.

Back in 2016, Donald Trump pledged to help the steel industry, with economic policies that would build new mills in western Pennsylvania and across the country. Manufacturing employment has increased in recent years, but the government shutdown - and the border wall that is at the heart of it - may have impacts of their own.

Not surprisingly, the steel industry supports the President's choice of building material.

"Steel is the right material to make such a barrier," said Tom Gibson, President of the American Iron and Steel Institute (AISI). "It's durable, it's strong, and steel is readily available."

Gibson is familiar with the various proposed designs for a steel barrier that have been made public.  

"We're talking about a steel barrier that could be 35-45 feet high, and 10 feet below grade. We were also told that the barrier could be approximately 1,000 miles long," he said.

AISI estimates that American steel companies produce somewhere between 90 and 100 million tons of steel a year. Gibson said that a proposed 1,000-mile-long barrier could require 3 million tons of steel. That's an order the industry would love to fill, he said.

Even so, John Packard said, "The reality of the impact is going to be relatively minor." Packard, the president and CEO of trade publication Steel Market Update, said because the wall could take years to build, companies won't need to open lots of new steel mills to furnish material for it.

"It's not like going out to Home Depot and buying a wire fence and sticking it in your yard and the next day you have it," said Packard. "This is more of a months-, years-long process. And as you spread things out, then the impact on the industry becomes less and less critical."

Meanwhile, another Trump policy - the 25 percent tariff on imported steel - is already having an impact. The tariff may help companies like Pittsburgh-based U.S. Steel, which owns the Edgar Thomson works in Braddock. But other American manufacturers that rely on imports have had to apply for tariff exemptions, and that application process is at a standstill because of the shutdown.

So although the border wall could help the industry, the shutdown it's caused has hurt other metal manufacturers.

"I had a conversation with the CEO of a company that had filed for an exclusion almost a year ago," Packard said. "His attorneys were telling him that they should get a response during the month of January ... and I have to assume that at this particular point it's now going to be sometime in February. So there's another month gone by that he's in limbo."

"One of the things that people often misunderstand about tariffs, is they assume tariffs will only raise the price of imported steel," said Carey Treado, who teaches economics at the University of Pittsburgh. "But tariffs raise the price both domestically and from imported sources."

That means that if a steel border wall is built, it could cost American taxpayers more than if the tariffs were never put in place.

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