The American steel industry's largest trade association is hailing the new United States-Mexico-Canada Agreement as a potential boon for U.S. steelmakers.
“We appreciate the administration’s hard work to reach this trade agreement between the U.S., Canada, and Mexico," American Iron and Steel Institute President and CEO Thomas Gibson said. "The NAFTA has provided significant benefits for the American steel industry by promoting the development of manufacturing supply chains in North America, especially with key customer groups like the automotive industry. The new agreement builds on this success by establishing new rules of origin that will further incentivize the use of North American steel in the manufacturing of automobiles and other steel-intensive goods in North America."
Automakers comprise a huge market for the U.S. steel industry, with one study projecting the demand for advanced high-strength steel alone will eclipse $40 billion by 2023.
The auto industry is spread across North America with supply chains that stretch across the United States, Canada, and Mexico. Steel made in Northwest Indiana for instance gets shipped to ArcelorMittal finishing lines in Calvert, Alabama that serve some customers in Mexico.
"The agreement also improves on the original NAFTA by creating new rules to address currency manipulation and state-owned enterprises, and by promoting increased cooperation and information sharing between the three North American governments to address circumvention and evasion of our trade and customs laws," Gibson said. "We believe these enhancements provide valuable improvements to the text of the original NAFTA that will help keep our manufacturing supply chains strong throughout North America.”
Other manufacturers who buy steel were not as pleased. The Coalition of American Metal Manufacturers and Users, a trade association that represents the aerospace, agriculture, automotive, consumer goods, construction, defense, electrical, medical, and other sectors, said it was a missed opportunity to end Section 232 tariffs of 25 percent on Canadian and Mexican steel.
“A golden opportunity was missed today to improve upon the Trump administration’s self-destructive 232 tariff scheme,” CAMMU spokesperson Paul Nathanson said. “Thousands of manufacturing companies around the country must today cope with price hikes, delivery delays and the outright unavailability of the steel and aluminum they count on to make their businesses operate.”
The trade organization said the tariffs that have restored U.S. steelmakers to profitability and helped workers land new contracts that will raise their pay by more than 14 percent over the next four years hurt other industries that buy steel by driving up prices. It pointed to GM's recently announced layoffs of 14,000 workers in North America.
“By cutting itself off from the global steel market, the U.S. has become an island of high steel prices,” Nathanson said. “The result of this policy is simple: American steel-using manufacturers cannot successfully compete against foreign competitors able to purchase steel at world market prices outside this country."