Steel Tariff Repeal Applauded

December 12, 2003
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GRAND RAPIDS — The lifting of import tariffs on lower-cost foreign steel received rousing praise from the office furniture industry, although there’s some worry about the prolonged effects on jobs.

The tariffs, imposed in the spring of 2002, caused prices to jump sharply for raw materials, perhaps representing the proverbial last straw for some component makers that supply the industry and decided to move some of their production offshore.

Steelcase Inc. CEO James Hackett, while certainly pleased that President George W. Bush lifted the tariffs, worries that jobs that may have been displaced won’t ever return.

“I feel it took the issue too long to get resolved,” Hackett said. “It had an undesired effect that likely is going to be hard to undo. We essentially transferred some jobs out because of the tariffs that won’t come back.”

Long-term contracts and an 80 percent/20 percent mix of domestic and foreign steel enabled Steelcase to absorb the higher costs resulting from the steel tariffs, Hackett said. Steelcase needs the lower-cost foreign steel in the supply mix to balance overhead costs, he said.

“The mix of having imported steel at a lower level helps our price competitiveness,” Hackett said. “We need this in order to stay globally competitive.”

Imposition of the steel tariffs, designed to help a struggling U.S. steel industry facing fierce competition from low-cost foreign producers, couldn’t have come at a worse time for the office furniture industry, which has been mired in a depression for nearly three years.

“It was another hit when we were down,” said Tom Reardon, executive director of the industry trade group BIFMA.

Component suppliers saw cost increases of 20 percent to 30 percent immediately when the tariffs went into effect, Reardon said. Some reported price increases as high as 80 percent to 100 percent on certain steel brands at a time when they were unable to pass along the higher costs to customers, he said.

The tariffs also caused disruptions in the supply chain early on, he said.

Reardon doubts whether any of the companies that may have moved jobs overseas because of the steel tariffs will return the production to the United States.

“If they made the change, they’re probably not going to be bringing them back here just because the tariffs are done,” Reardon said.

William Gaskin, president of the Precision Metalforming Association, heralded the lifting of the steel tariffs as “the right decision for the 13 million workers in steel-consuming industries, the right decision for the manufacturing sector that is just beginning to recover, and the right decision for the overall U.S. economy.”

West Michigan’s congressional duo — Rep. Peter Hoekstra, R-Holland, and Rep. Vern Ehlers, R-Grand Rapids — also trumpeted the president’s decision.

Hoekstra described the move as “awesome.”

“They should have never been put in place in the first place,” Hoekstra said.

Ehlers said he was “delighted” by the president’s decision, made in the face of threats from the European Union, Japan and other trading partners that were prepared to retaliate with more than $2.2 billion in tariffs on U.S. exports.

“Eliminating the steel tariff will result in a lower cost for steel for manufacturers of office furniture, auto parts and many other products produced in West Michigan. In turn, this will lower the cost of those final products, which will drive up sales and increase employment in our area,” Ehlers said. “It is important to address unfair trade practices, such as the dumping of foreign products on the American marketplace at below-cost prices, which the tariff was intended to counteract. But we must do so in a manner that promotes fair and open trade around the world.”    

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