Economy

Steel makers and manufacturers around the Ohio Valley are waiting for a report from the Trump administration that could trigger higher tariffs on imported steel and bring mixed results for a region that still has strong ties to the industry.

During the presidential campaign, Trump told voters he would place sanctions on steel imports from China and other countries, and the report being prepared by the Commerce Department could provide a rationale for new tariffs.

In a statement, Cincinnati-based AK Steel said the company supports the administration’s investigation into “threats to our country’s national security due to unfair and illegal trade practices by foreign producers.” AK Steel has facilities in Kentucky, Ohio, and West Virginia.

Although the region’s steel industry has declined dramatically since its peak more than a half century ago, the American Iron and Steel Institute says the industry still supports more than 20,500 jobs at 38 iron and steel facilities in Kentucky, Ohio and West Virginia.

In April, President Trump asked the Commerce Dept. to report on whether the country’s reliance on foreign steel imports affects national security. The Trade Expansion Act gives the president power to use tariffs if excessive foreign imports are found to threaten national security, but that is rarely invoked.

Senate Commerce Committee staff

Commerce Secretary nominee Wilbur Ross meets Sen. John Thune (R-SD), who chairs the Senate Commerce Committee.

While relatively little imported steel is used directly in defense-related manufacturing, AK Steel maintains that critical infrastructure should also be considered, “especially in areas like electrical steels, which are used to power our nation’s electrical grid.”

The company statement said electrical steel imports have doubled over the past year.

Western Kentucky University Economics Professor Brian Strow predicted that Trump will follow through on his campaign pledge, but warned that tariffs will likely have negative effects for the region.

“I believe that they’re coming but I’m not happy about it,” Strow said.

He said higher prices on imported steel would have an adverse effect on some regional businesses sensitive to costs for raw materials, such as auto manufacturing.

“Kentucky is big in the auto industry,” he said, “and it turns out that cars need steel and most of the steel we put into U.S. cars comes from abroad.”

Strow said there are far more people in the region employed in the automobile industry than in steel.

“So it’s a case of politicians trying to reward one specific special interest group at the cost of others,” he said.

And then, Strow said, there is the likelihood of retaliation by trading partners that could affect any number of exports important to the regional economy. A European Union official even called out Kentucky bourbon as a potential target for retaliatory tariffs.

Strow recalled that when President George W. Bush imposed tariffs on steel imports in 2002, Europeans responded with their own import tariffs on Harley Davidson motorcycles, a good produced in a swing state Bush needed for re-election.

“They went for the political jugular,” Strow said. “And I suspect that’s what they’re doing with the bourbon industry.”

The Commerce Dept. and White House officials have indicated the steel imports report is coming soon. In his business career, Commerce Secretary Wilbur Ross purchased several bankrupt steel companies, including Bethlehem Steel Corporation and Weirton Steel in the Ohio Valley. He sold the companies in 2005.