Trump tariff stirs uncertainty and concern in Texas steel’s industry

Borusan Mannesmann Pipe chief executive Joel Johnson said his company faces levies of around $30 million a year unless the US Commerce Department grants its request to be exempted from Trump’s tariff on imported steel. (AP)
Updated 25 June 2018
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Trump tariff stirs uncertainty and concern in Texas steel’s industry

  • Trump says his tariffs on steel, aluminum and other goods will put US companies and workers on stronger footing by winding back the clock of globalization with protectionist trade policies
  • Pipe mills are numerous in Texas, which leads the nation in oil and natural gas production

BAYTOWN, Texas: Joel Johnson is fighting an uphill battle to keep his pipe factory in this refinery suburb east of Houston from becoming a casualty in President Donald Trump’s bitter trade dispute with America’s allies and adversaries.
He’s the CEO of Borusan Mannesmann Pipe US, a company with Turkish roots that manufactures the specialized steel pipe used by energy companies to pull oil and natural gas out of the earth. Unless the Commerce Department grants its request to be exempted from Trump’s tariff on imported steel, Johnson said, Borusan would face levies of around $30 million a year — a staggering sum for a company with plans to expand.
“We don’t have any proof we’re being heard,” Johnson said.
Trump says his tariffs on steel, aluminum and other goods will put US companies and workers on stronger footing by winding back the clock of globalization with protectionist trade policies. But the steel tariff — essentially a 25 percent tax — may backfire on the very people the president is aiming to help. The Commerce Department has been deluged with requests from 20,000 companies seeking exemptions.
In Bay City, Texas, 80 miles southwest of this refinery suburb outside Houston, global steel giant Tenaris churns out steel pipe in a $1.8 billion state-of-the-art facility that began operating late last year. Tenaris makes its seamless pipe from solid rods of steel called billets that are imported from its mills in Mexico, Romania, Italy and Argentina. It’s also seeking to be excluded from the steel tariff.
“The decision is out of our hands,” said Luca Zanotti, president of Tenaris’s US operations, while expressing confidence its request would be approved. If it’s not? “We’ll adapt,” he said.
Steelworkers, meanwhile, are cheering the tariff even as they remain skeptical of Trump’s pledge to empower blue-collar Americans. They also worry about the possibility of exemptions.
“You put these tariffs (in place) but now you’re going to exclude everybody so they’re kind of pointless,” said Durwin Royal, president of United Steelworkers’ Local 4134 in Lone Star, Texas.
The diverse views illustrate the complexity, confusion and concern lurking behind Trump’s “America First” pledge. The steel tariff — essentially a 25 percent tax — may backfire on the very people the president is aiming to help.
Pipe mills are numerous in Texas, which leads the nation in oil and natural gas production. Mills that use imported steel typically do so when they can’t get the exact type or quantity they need from US producers. Many of them are among the thousands of companies around the country that have filed exclusion requests with the Commerce Department to avoid being hit by the steel tariff.
Most of them are in the dark, unsure if their applications will be approved. A denial may torpedo plans to expand a factory. Or a company may have to lay off employees.
There’s no playbook to guide companies through an exemption process Johnson described as chaotic and unpredictable. He’s hired a lobbyist, former New York Gov. George Pataki, to drum up support in Washington. He’s fending off objections from competitors who want Borusan’s request denied.
On a sweltering afternoon earlier this month, Johnson assembled dozens of his employees in an air-conditioned room for what amounted to a Hail Mary pass. After lunching on sandwiches from Chick-fil-A, Borusan workers wrote personal messages on oversized postcards to be sent to Trump and other senior officials in Washington and Austin, the Texas capital, pleading for their help in securing the tariff exemption.
“I don’t know what motivates politicians besides votes,” Johnson said. “That’s why we’re doing this crazy exercise.”
Johnson said he had for weeks unsuccessfully sought support from GOP Rep. Brian Babin, whose district includes Baytown. Babin wrote to Commerce Secretary Wilbur Ross on Thursday, expressing his strong support for Borusan’s request and urging Ross to give it “your highest consideration.”
“Finally,” Johnson said.
Zanotti declined to say how much Tenaris would have to pay because of the tariff, but he downplayed the expense as a cost of doing business on a global scale. Tenaris operates in 16 countries.
“Of course we don’t like it,” Zanotti said of the tariff. But, he added, “we’re used to dealing with moving parts. This is another moving part.”
The company doesn’t have a registered lobbyist in Washington, let alone an office. It does have deep pockets, however. The company has spent $8 billion over the last decade to expand its foothold in America, an investment he doesn’t think the Commerce Department should overlook.
“We’re positive we’re going to get a good conclusion,” Zanotti said.
Although Royal and Trey Green, Local 4134’s vice president, were heartened by the steel tariff, they said they’re under no illusion Trump is a friend to organized labor. Nor are they convinced his tough talk on trade will lead to a rebuilt US steel industry with more and better jobs.
“I don’t know that putting tariffs on just one or two particular items are going to be the mainstay that helps us in the future,” Green said.


Foreign investors hope India dials back policy shocks after Modi win

Updated 24 May 2019
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

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“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”