In CT, Trump tariffs could raise costs
The steel and aluminum tariffs announced by the Trump administration on Friday are expected to adversely affect Connecticut manufacturers that use these metals while benefiting metal producers, according to experts familiar with the state’s economy.
On Friday, the Trump administration’s 25 percent import tax on steel and 10 percent tax on aluminum went into effect. According to Peter Gioia, vice president and economist at the Connecticut Business and Industry Association, many companies in the state use steel and aluminum to manufacture parts, which are then exported with extra added value. These companies will have to pay higher prices to acquire metals, which will either lead to more expensive products or reduced manufacturing.
“Any type of tariff effectively acts like a tax on consumers and drives up the prices of products that have increased tariffs. In Connecticut, there are no companies that make steel, but there are plenty of companies that use steel,” Gioia said. “Though the effect of this [tariff] may be very positive for … steel producers, it is negative for a lot of steel users.”
The U.S. Customs and Border Protection-enforced tariffs were originally announced on March 1 and formally signed a week later. The Trump administration announced temporary exemptions to the original act for Canada and Mexico and added further exemptions on March 22 for South Korea, Brazil, Argentina, the European Union and Australia. These countries were given May 1 deadlines to propose an alternative agreement, with South Korea having announced a potential deal on March 26.
In New Haven, the impact of the tariffs largely remains to be seen, according to Matthew Nemerson SOM ’81, the city’s economic development administrator. While New Haven no longer has steel mills, Nemerson pointed out that there is still a major aluminum manufacturer in the area — North Haven-based United Aluminum — that is expected to benefit from the tariffs. Nemerson echoed Gioia’s analysis on the projected effects of the tariffs but emphasized the uncertainty of the economic analysis at the moment.
“I would imagine that most manufacturers — wherever they are sourcing their steel — are making sure to look that there isn’t an increase in the cost of the steel. Sometimes the tariffs get absorbed [into the price] and the cost goes up,” he said. “If you make aluminum, like United Aluminum, you like the tariffs … the people who buy the products will spend more money and that will be the impact.”
United Aluminum President John Lapides ’72 attended the White House’s original announcement of the tariffs on March 1. At a roundtable meeting with leaders of the steel and aluminum manufacturing industries, Lapides pointed to unfair competition as a cause of low investment and unemployment in America, emphasizing the necessity of a “level playing field” to allow America’s manufacturing industries to compete. He also warned of the national security issues that could stem from a weak manufacturing base.
Defense contractors such as United Technologies — an aerospace and military technology conglomerate headquartered in Farmington — require metal in their manufacturing processing. Alissa DeJonge GRD ’00, vice president of research at the Connecticut Economic Resource Center, said that the aerospace industry may be particularly affected by the tariffs, though nation-specific exemptions could potentially change the situation.
“We have a very large aerospace manufacturing industry in the state that depends on steel. And so, actually, from that stance, I think some manufacturers are definitely worried about how different tariffs will affect the prices of the steel they need to make their aerospace components,” he said. “I am hoping [exemptions] will mitigate the adverse effects the manufacturing industry is expecting.”
Some members of the Connecticut congressional delegation did not dismiss the tariffs outright, but they still emphasized that precision and lucidity were necessary in applying tariffs.
U.S. Sen. Chris Murphy, D-Conn., said in an email to the News that tariffs can be a “really important tool” to counteract the efforts of foreign actors like China, but he criticized the way the Trump administration has rolled out the measures. Murphy said that the administration should have contacted American allies to work together on the tariffs — which are generally regarded as targeting China — before announcing the policy. The administration’s current strategy, Murphy said, runs the risk of creating a rift between the United States and its European allies, to the advantage of Russia. He also criticized the timing from a strategic angle, pointing to important negotiations with China over North Korea policy.
During a March 21 House Ways and Means Committee hearing, U.S. Rep. John Larson, D-Hartford, raised questions about the exemption procedure, asking U.S. Trade Ambassador Robert Lighthizer to set out the schedule for and expected nature of such exemptions, drawing attention to the many steel- and aluminum-using businesses in his district.
“When you’re going down this path, you have got to use a rifle, not a shotgun,” Gioia said. “If China is the problem, focus in on that … I do not think that this was fully thought through before they pulled the trigger.”
The New Haven Manufacturer’s Association declined to comment on the story. Ed Fenton, executive director of the association, who said he was speaking in his personal capacity, explained to the News that the association probably has an equal number of members who do and do not benefit from the tariffs.
“Some people rely on imported products for their supply chain, and some people want to be protected in this country,” Fenton said. “On a case-by-case basis, it really depends.”
Keshav Raghavan | email@example.com
Correction, March 28: A previous version of this article incorrectly stated Ed Fenton’s title. He is the executive director of the New Haven Manufacturer’s Association, not the president.