New steel and aluminum tariffs are starting to hit American supply chains but not necessarily in the way the White House intends, according to the Wall Street Journal. U.S. firms that use the metals in manufacturing say the levies have led to higher materials prices, pushing them to charge more for their products.
That’s leading some customers to turn instead to foreign suppliers that use cheaper, tariff-free metals. The WSJ’s Andrew Tangel and Ruth Simon write that the fallout, while so far limited, illustrates how efforts to protect U.S. steelmakers can cause unintended pain for others in the manufacturing world.
One Illinois-based fabricator says some customers have moved production to Europe and Canada because of higher raw materials prices. The tariff battles look like they’re likely to grow: Key U.S. allies are pledging retaliation, and the WSJ’s Lingling Wei and Bob Davis report that weekend talks between the U.S. and China ended with no signs of a settlement in their dispute.
U.S. Sen. Bob Corker, R-Tenn., says he and others are "crafting" legislation requiring congressional authority over levying tariffs in response to President Donald Trump's imposition of stiff steel and aluminum tariffs on Canada, Mexico and the European Union, according to the Chattanooga-Times Free Press.
"I think that the authorities are being abused, and I think a number of people around here do," the Chattanooga Republican told Washington-based reporters Monday in a follow-up to critical tweets he put out over the weekend on the issue. "So we're crafting some legislation, working with other offices to try to pull back some of those authorities to Congress."
“What the legislation we're working on would do would be to make sure before those things could even occur you'd have to get congressional approval," he said.
In addition to the already imposed 25 percent duty on imported steel and 10 percent on aluminum, the president is examining whether to invoke the same national security provision to slap tariffs on imports of cars, vans, trucks and vehicle parts, a move that has also drawn concern in Tennessee, which is home to three manufacturing plants, including Volkswagen, that rely on a global supply chain and worry about blowback.
Corker tweeted he was "working with like-minded Republican senators on ways to push back on the president using authorities in ways never intended and that are damaging to our country and our allies. Will Democrats join us?"
Phil Bredesen tweeted the following response:
"I respect Senator Corker for putting Tennessee ahead of Washington politics. These tariffs do a lot of damage to TN businesses. For my part, I call on every Democrat and Republican who cares about our state to stand with him on this."
In an appearance on Fox Business News' Mornings With Maria, U.S. Congresswoman Marsha Blackburn, said, "We are watching [the situation] very closely. Of course, we know that the intention is to punish bad actors and not the American consumer. So, that is something everybody agrees on."
Whether or not a bipartisan coalition could get traction is still unclear.
In the House, Majority Leader Kevin McCarthy, R-California, defended Trump's efforts to leverage tariffs on close U.S. allies as "standing up" for free trade during a Sunday appearance on CNN's "State of the Union."
"We are in the middle of a trade discussion. Nobody wants to be in a trade war. Nobody wins a trade war," the California Republican said on CNN. "But we are standing up for the process of where we're moving forward that we have fair trade."
Republican Gov. Bill Haslam told Tennessee reporters in Lawrenceburg Monday that he remains "concerned about the impact here, No. 1, about on the cost of goods when they come in to us. We produce a lot of automobiles and automotive-related [products], and I'm concerned that tariffs will hurt that."
The governor also said he is also worried about prospects of a potential trade war as Canada, Mexico and the European Union slap the U.S. with their own tariffs.
"I'm concerned about retaliation — whether it be agricultural products or Jack Daniels or any of the long list of other things we produce here. I'm concerned that folks will raise ... the tariffs on our exports and we'll feel that here as well."
Tennessee "depends a lot on international trade, and I think when you throw a wrench like this into the system that's been working really well for Tennessee, I'm concerned about the impact," Haslam said.
The White House said late Monday that tariffs of 25 percent on steel and 10 percent on aluminum from the European Union wouldn’t go into effect as planned on Tuesday. Instead, the EU has another month to continue negotiating with the U.S. about a new pact to avoid the tariffs, which are already in effect against China, Russia, Japan and others. Canada and Mexico were given an extension until June 1 while the North American Free Trade Agreement is renegotiated.
Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.