Trade

Steelmaker Who Welcomed Tariffs Sues Over Tariffs

JM Ashby
Written by JM Ashby

JSW Steel USA and their chief executive officer John Hritz once asked for and welcomed Trump's tariffs on imports of foreign steel and aluminum, but the company is now suing the Commerce Department for not granting them an exemption from those same tariffs.

JSW Steel relies on imports of slabs of semi-finished steel that they transform into other products because there's no reliable source they can buy the slabs from domestically and, for complicated reasons that I believe are actually quite dumb, JSW Steel was counting on exemptions that they still haven't received.

The Commerce Department studied whether or not imports of steel were a threat to national security all the way back in 2001 and concluded that imports were not a threat because American steelmakers produce more than enough metal to meet demands in the case of war.

The metal industry wasn't happy with the Commerce Department's conclusion, but under Donald Trump they got their wish. The Trump regime decided that imports of steel actually are a threat to national security and they imposed tariffs as result.

American metal firms still produce more than enough steel to meet demands in the case of war, but the problem for JSW Steel is that they cannot buy slabs of semi-finished steel from American companies because those companies would rather keep it for themselves and sell it for more than JSW Steel would pay to import it without tariffs.

From Bloomberg:

John Hritz, president and chief executive officer of JSW Steel USA Inc., put on a big smile and a Texas flag pin for his television spot on Fox Business in March 2018. “It’s a special day,” he told his host, then told her again: “It’s a special day.” JSW Steel’s India-based parent company, JSW Group, had announced it would invest $500 million and create 500 jobs at its steel mill in Baytown, Texas. “We’re going to make history,” Hritz said.

Hritz was counting on help from President Trump, who three weeks earlier had announced his intention to impose tariffs of 25% on steel and 10% on aluminum imported to the U.S. The Fox anchor wondered if the import levies might interfere with JSW’s Baytown plan, given that much of the raw steel processed at the mill was imported from India and Mexico. “Absolutely not,” Hritz said. On the tariffs, JSW was “in lockstep with the president and with the administration.”

Not so much anymore. A big piece of the Baytown project has been postponed indefinitely, in part because of Trump’s tariffs. Both Baytown and a sister plant in Ohio, where JSW once planned to invest another $500 million, have been operating at unprofitably low production levels, also owing in part to the tariffs. JSW has sued the administration for refusing to exempt it from paying the levies on the massive slabs of steel the company imports and turns into pipe and other products for industrial use. “It’s the hypocritical nature of these tariffs that’s completely dumbfounding us,” says Parth Jindal, director of JSW Steel USA and managing director of JSW Cement Ltd. in India. “It just doesn’t add up.

Let's talk about the "hypocritical nature" of these tariffs.

The metal industry as whole but particularly JSW Steel is completely and hopelessly hypocritical. They asked for tariffs at the expense of virtually every other sector of the American manufacturing industry but also at the expense of each other within the metal industry.

American steelmakers got what they wanted, but it didn't work out the way most of them hoped because disrupting the free market with tariffs and then creating a patchwork of poorly-explained exemptions means there's no clarity and no guarantee of anything.

Starting a trade war based on lies and misrepresentations of empirical economics means things like exemptions from tariffs will be decided along the same lines with little rhyme or reason to it beyond what political appointees and cabinet lackeys in Trump regime believe will be the most politically and/or financially beneficial to them.

Granting JSW Steel an exemption from tariffs on imports of semi-finished steel would be good for them, but it wouldn't be good for US Steel which is capable of producing their own slabs. The latter is far more influential in Midwestern politics where Trump needs the support of gullible white labor unions and industry groups to stand a chance of winning the next election.

I don't worship at the alter of Free Market Jesus, but it seems clear that letting the market run its course would be preferable to this shitshow. JSW Steel and their bootlicking CEO never should have asked for or welcomed tariffs.

Most presidential administrations impose tariffs as a last resort, not as a first strike, because it leads to things like this. A few companies with the most political influence and the highest paid lobbyists can maneuver into favorable positions while others are left to eat whatever comes from it.

  • Draxiar

    “It’s unfair that we’re caught up in the same shit as everyone else! We’re trump supporters this wasn’t supposed to happen to *US*!”

  • muselet

    I can’t manage any sympathy for the dumb clucks running JSW Steel USA. Back in 2018 they thought either that supporting the Trump administration would mean a show of reciprocal loyalty or that the market distortions introduced by tariffs wouldn’t distort the market in ways that would hurt their company.

    Not a smart decision.

    Suing the administration over a policy JSW supported just compounds the error. The board of directors should do the honorable thing and resign en masse.

    I can, however, manage sympathy for the workers at JSW’s plants, down at the bottom of the food chain, since they don’t make the decisions and won’t get golden parachutes like the executives. Whatever ultimately happens to JSW is because of the suits, not them.

    –alopecia