TPT November 2018

G LOBA L MARKE T P L AC E

G LOBA L MARKE T P L AC E

from the United States. His trade policy, which includes tariffs on steel and aluminium from countries across the globe, also has the professed aim of lifting American manufacturing by making it less cost-effective to outsource production overseas.

Tar i f fs and tr ade US companies that rely heavily on Chinese imports say that more tariffs will hurt – not help – many of their businesses Executives from dozens of American companies flocked to Washington on 20 August to warn the Trump administration that imposing tariffs on an additional $200 billion worth of Chinese goods would cripple their businesses and raise prices on a wide array of products. They appeared at the office of the United States Trade Representative on the first of six days of hearings on Mr Trump’s plan to impose additional tariffs of as much as 25 per cent on a wide array of Chinese imports. The Trump administration had already imposed tariffs on $34 billion worth of Chinese goods, and tariffs on an additional $16 billion worth were looming. China retaliated with its own tariffs on American products; and, as noted by Alan Rappeport of the New York Times, “Neither country has shown signs that it is willing to back down.” The schedule of hearings with trade officials was doubled from an initial three days to accommodate the leaders of nearly 400 companies and trade groups – all eager to testify before the government panel that, if the Trump tariffs move ahead, it would mean job cuts or worse for their businesses. (“Companies Warn More China Tariffs Will Cripple Them and Hurt Consumers,” 20 August) Mr Rappeport reported that the protesting executives sounded this common theme: The US no longer produces many materials that their businesses depend on. The rise of global supply chains has shifted the bulk of manufacturing and production outside the country, leaving companies no choice but to rely on foreign materials, including those from China. One of the executives told the Times that finding alternatives to China or re-starting domestic production is not the answer for companies that have been depending on Chinese manufacturing for decades. “China remains a vital and not easily replaceable link in our industry’s supply chain,” said Tom Cove of the Sports and Fitness Industry Association. “Shifting manufacturing to other countries is simply not feasible in real time or to scale.” › The extraordinarily single-minded delegation arrived in Washington on the eve of the resumption of fractious trade talks between the United States and China. Economists have warned that the humming American economy could begin to slow if the US and China should engage in a protracted trade war. › Mr Trump has said his tariffs are a negotiating tactic to compel China to lower its trade barriers, stop the theft of intellectual property, and open Chinese markets to businesses

Steel Ordered to replace several thousand feet of sewer pipe, a city in the US South braces for the bite of the Trump tariffs The utility director of the city of Fort Smith, Arkansas, USA, has warned other directors that volatility in the steel market caused by President Trump’s steel tariffs may impact the price the city spends on pipe to comply with a federal consent decree. As reported by Dave Hughes of the Northwest Arkansas Democrat-Gazette , Jerry Walters briefed directors on 21 August as they prepared to consider a resolution to make a nearly $1.33 million initial payment for several thousand feet of pipe as part of sewer system capacity improvements. The work, to be done by Kajacs Contractors Inc (Poplar Bluff, Missouri), is estimated to cost about $10 million. The Fort Smith utility department is a big user of steel for the water and sewer pipes it lays throughout the city, and Mr Walters said $785,000 of the $1.33 million initial outlay was allocated for steel pipe. Citing the effect on the US steel market of the 25 per cent tariff, he told the directors, “I think you’re going to see that volatility flow over into our projects.” (“Volatility Caused by Tariffs Will Affect Price of Arkansas City’s Pipe Work, Utility Director Says,” 25 August.) Overall, he said, the city “may well see” an increase in the price of steel. Mr Walters told the directors his staff had heard reports that some price quotes were given as of a given hour, raising the possibility of rapidly changing prices. Hourly quotes are unusual. A New York Times  article of 1 August said ArcelorMittal, the world’s largest steel producer, received an average price for its steel in North America that was up 12 per cent annually to $853 a ton. › As background to the Fort Smith item, Mr Hughes of the Democrat-Gazette reported that the city signed the consent decree in early 2015 with the US Environmental Protection Agency, the Department of Justice, and the Arkansas Department of Environmental Quality to make improvements to its sewer system to fix long-standing violations of the federal Clean Water Act. Fort Smith has been given 12 years to complete the work, which city officials initially estimated at $450 million. The sewer rates of city customers were raised 167 per cent over three years to generate the revenue to pay for the improvements.

56

www.read-tpt.com

NOVEMBER 2018