ePaper

Sunday, April 22, 2018

Trade war backfire: Steel tariff shrapnel hits US farmers

  • Print

Lucas Strom, who runs a century-old family farm in rural Illinois, canceled an order to buy a new $71,000 grain storage bin last month - after the seller raised the price 5 percent in a day. The reason: steel prices jumped right after US President Donald Trump announced tariffs.

Throughout US farm country, where Trump has enjoyed strong support, tariffs on steel and aluminum imports are boosting costs for equipment and infrastructure and causing some farmers and agricultural firms to scrap purchases and expansion plans, according to Reuters' interviews with farmers, manufacturers, construction firms and food shippers.

The impact of rising steel prices on agriculture illustrates the unintended and unpredictable consequences of aggressive protectionism in a global economy. And the blow comes as farmers fear a more direct hit from retaliatory tariffs threatened by China on crops such as sorghum and soybeans, the most valuable US agricultural export.

A&P Grain Systems in Maple Park, Illinois - the seller of the storage bin Strom wanted to buy with a neighboring farmer - raised its price two days after Trump announced aluminum and steel tariffs on March 1 to protect US producers of the metals. Strom and his neighbor backed out.

"Would that price destroy us? No," Strom said. "But these days, you have to be smart about your expenses." The metals tariffs also hitting makers and sellers of farm equipment, from smaller firms like A&P Grain to global giants such as Deere & Co (DE.N) and Caterpillar Inc (CAT.N). Such firms are struggling with whether and how to pass along their higher raw materials costs to farmers who are already reeling from low commodity prices amid a global grains glut.

The world's two largest economies have threatened each other with tariffs on tens of billions of dollars of goods recent weeks. Trump imposed tariffs of 25 percent on steel and 10 percent on aluminum in a move mainly aimed at curbing imports from China. He has since temporarily excluded the European Union and six other allies from the duties and given them until May 1 to negotiate permanent exemptions.

A&P Grain President Dave Altepeter said the steel used in their bins is made in the United States, but domestic steel prices also have soared because of the tariffs. US steel mills typically adjust their prices once a year, normally in the first quarter, Altepeter said. But this year, those prices have jumped four times, he said. The price of steel used in A&P's grain bins has jumped about 20 percent since January 1.

 "Any time there's any type of negative talk that affects the steel mill, they've raised the price," said Altepeter. Last year, about 95,000 tons of steel was shipped to the agriculture industry, compared to the 14 million tons for the US auto industry, according to the American Iron and Steel Institute, an industry group.

Other factors had been driving up steel prices before the recent trade disputes, including an improving global economy and accelerating manufacturing and construction, particularly in the US The White House referred questions from Reuters to the US Department of Agriculture.

-Reuters, Kane County

More News For this Category

Fed policymakers say not to worry

| By
As the gap between short- and long-term borrowing costs hovers near its lowest in more than 10 years, speculation has risen over whether the so-called yield curve is signaling
Fed policymakers say  not to worry

Trade tensions set for brighter US corporate spotlight

| By
The potential for an intensifying trade dispute to undercut the US stock market could become clearer next week when a host of multinational companies reports quarterly results that may
Trade tensions set for brighter US corporate spotlight

China to impose anti-dumping duty on US, EU, S'pore rubber

| By Business Desk
China will impose temporary anti-dumping measures on a certain type of synthetic rubber imported from the United States, the European Union and Singapore, its Commerce Ministry said yesterday. The
China to impose anti-dumping duty on US, EU, S'pore rubber

Trump's next $100b tariff dilemma

| By
US consumers may be about to directly feel the effects of the trade fight started by US President Trump with China and other countries this year when a new
Trump's next $100b tariff dilemma

Venezuela's collapse one of the worst in modern history: IMF

| By
Venezuela's economic collapse ranks as one of the worst in modern history, an International Monetary Fund official said on Friday.With an expected contraction of 15 percent this year, and
Venezuela's collapse one of the worst in modern history: IMF

Apple offers battery replacement

| By
Apple Inc on Friday said component failure in a limited number of MacBook Pros has caused built-in battery to expand, adding, it will offer worldwide free replacement for such

Pound slides as UK rate hike prospect dims

| By
The pound fell on Friday after Bank of England Governor Mark Carney shook the market's confidence in an early interest rate hike, dealers said. "Carney put an end to

Asian oil demand to hit record, industry can't take eyes off Middle East

| By
Asian oil demand will hit a record in April just as global crude values are lifted to levels not seen in three years by Middle East supply risks and
Asian oil demand to hit record, industry can't take eyes off Middle East

Russia hints producers could ease up on oil output curbs countering Saudi view

| By
OPEC and non-OPEC oil producers could begin easing up on output curbs before the end of the year, Russian Energy Minister Alexander Novak said on Friday, sounding a bearish
Russia hints producers could ease up on oil output curbs countering Saudi view

Facebook to roll out political ad in time for German vote

| By
Facebook said on Friday it would roll out a new feature designed to make political advertising more transparent in time for a key German regional election, as it seeks
Facebook to roll out political ad in time for German vote

© 2018 The Asian Age