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After a year of tariffs, steel industry deals with "chaos fatigue"
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More than one year since the Trump administration implemented the Section 232 tariffs — 25% on imported steel and 10% on aluminum — the steel industry continues to deal with much uncertainty. When the tariffs went into effect in March 2018, businesses scrambled to adjust import purchases and find domestic steel to avoid the increased costs. This boosted sales for American manufacturers but hurt smaller import businesses. By now, trade officials have yet to map out a plan for any further policy change or resolution to the tariffs. And without a clear timeline for what will happen next on trade, businesses are now experiencing “chaos fatigue,” according to Marketplace regular Lisa Goldenberg, president of Delaware Steel Co., based in Pennsylvania. She spoke with Marketplace host Kai Ryssdal about the stress of doing business without a policy plan in sight. The following is an edited transcript of their conversation.
Ryssdal: How’s business, how’s steel these days?
Goldenberg: I would give it a fair. Disappointing is a better way of saying it. I’m not down in the dumps, because I rarely get that, but things are not humming along as they should be. This should be a pretty busy time of year, and I’m disappointed to say that things are not as robust as expected.
Ryssdal: How come, what’s going on?
Goldenberg: You know, it’s tough. I gave a very strong first-quarter forecast, and I completely blew it, I’m humbled to say. I guess that happens from time to time. All the indicators gave us reason to believe first quarter is always strong and this would be equally strong, and it just wasn’t. I think manufacturing volume is a little bit down. And I also think that margins are really getting squeezed. It’s difficult to say why … chaos fatigue. I think the world is chaotic.
Ryssdal: Yeah, that’s where I was going to go. I was going to ask you to quantify uncertainty, right, because here we are, a year into the Trump administration’s trade program with tariffs, and people are still sussing it out, and we don’t know what’s going on with China. How big a deal is uncertainty, or as you just called it, chaos fatigue?
Goldenberg: Well, I think it’s a continuum. Where you first start when there’s chaos, it’s exciting, and people scramble to buy or to take positions because it could get really bad. Right? So if I told you that drought was coming, you’d run and buy water. But if after a year drought wasn’t coming, you wouldn’t buy that much water, and after a while you’d start to think, “What about the water I have?” and “I’d better start drinking that,” and “Do I need more?” And at the same time, the administration saying “W’re going to have a deal any minute.” So not only is drought not coming, but, in fact, you might have an endless supply of water. So how much water would you go buy? It’s the same thing with steel, and the fatigue is nobody knows how to plan, everyone’s numbers are just dramatically off. So something has to change.
Ryssdal: I’m going to ask a personal question here, are you ready?
Goldenberg: Go for it. I’m pretty open.
Ryssdal: I know you are. That’s why I feel OK asking this question. How long have you been in the steel business?
Ryssdal: So without putting any of those “this is unprecedented” and “oh, my goodness, it’s cataclysmic,” is this one of the most unusual periods you’ve seen in your industry?
Goldenberg: No. That’s a fair question. We’ve been in horrible steel markets, you know, scary, downward spiral, no end in sight. This is not that. This is something entirely different. I speak to people all day who think the administration is doing a great job. They just want policy. And I got to tell you, in manufacturing, there’s a lot. They just got unbelievable tax credits. So it’s been a huge boost to manufacturing. And people who really dislike the administration, they’re saying “Well, OK, I don’t like you, but give me some policies so I can make a plan.”
Ryssdal: How much is this chaos slowing you down? And I’m talking just simply dealing with paperwork and all the tariff exclusion requests and all of that stuff that comes along with this?
Goldenberg: OK. It’s so burdensome. So I had been waiting for months for steel to cross the border from Mexico to the United States. And the answer I’m given day after day is “You’ll just have to wait your turn.” There is no proper way to handle the paperwork. So steel sits. I got a call from a very good Canadian customer screaming the other day that paperwork was taking forever to cross the border and blaming my team. And we worked with Canadians, you know, for 200 years sort of effortlessly. This is a new drama. Suddenly we’re combative with our trade partners. It’s bizarre. It’s craziness.
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