WASHINGTON -- Steel producers in northeast Arkansas have welcomed tariffs on foreign steel and aluminum imports, but the new trade barriers are causing alarm elsewhere in the state.
During a visit to Capitol Hill this week, business leaders from Pine Bluff warned that the tariffs could cost people jobs in their community and in Northwest Arkansas.
And the University of Arkansas System's Agriculture Division predicted in an analysis released late Thursday that a 25 percent retaliatory tariff on U.S. soybeans, rice, corn and grain sorghum could cost the state's economy $383 million.
President Donald Trump on Thursday afternoon announced tariffs of 25 percent on steel and 10 percent on aluminum, although officials said Canada and Mexico would be temporarily exempted.
Plants in Pine Bluff, Conway, Van Buren and Rogers rely on a type of steel wire rods that aren't manufactured in the United States. With it, they make steel cord that is used by American tire manufacturers, including Cooper Tire & Rubber Co., which has a plant in Texarkana.
Rising tariffs could cause the companies to see their costs rise, making it harder for them -- and U.S. tire-makers -- to compete, critics say. Foreign-made tires, which are shipped into the U.S., won't be subjected to the tariffs, they note.
"It's a very big issue for Rogers and Northwest Arkansas," said Jon Moran, Rogers-Lowell Area Chamber of Commerce senior vice president of government affairs. "We're very concerned."
Uncertainty over steel tariffs has already halted one multimillion-dollar project in the area, he noted.
Advocates for U.S. steel say the industry deserves a level playing field.
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U.S. Rep. Rick Crawford, co-chairman of the Congressional Steel Caucus, said Trump is fulfilling an election promise by issuing sanctions. The Republican from Jonesboro represents one of the nation's largest steel-producing areas.
In an interview after Thursday's announcement, Crawford said the White House is addressing a genuine threat to the nation's well-being.
"China's been doing this for a long time. They are the most egregious violator. We've tried a variety of measures, and they're continuing to ... flood the market," he said. "It's not just in America's interest to recognize this and take action, this is probably something that ought to be recognized on the global scale so that they'll be forced to scale back their production."
But business leaders and others in the state's congressional delegation say the tariffs could have unpleasant consequences.
"In many ways, the costs are going to be spread out amongst consumers. But in Arkansas, we're going to see those costs acutely, and we're going to bear more of the costs because we've got jobs at stake," said Jamie Gates, executive vice president of the Conway Chamber of Commerce.
Kiswire Ltd., which has a Pine Bluff plant, is a South Korean company. Tokusen USA, in Conway, is Japanese-owned. Bekaert, a Belgian company, has the two Northwest Arkansas plants.
Each company has created more than 300 jobs in the Natural State.
Two years ago, Bekaert announced that it would expand its Rogers workforce, adding more than 100 jobs and investing $32 million to increase its output.
It had second thoughts, however, after the U.S. Trade Commission opened an investigation into steel imports.
"Undertaking such [a] commitment does not make business sense if" the material will not be available, a Bekaert company executive testified during trade commission proceedings last year.
ENDANGERED JOBS?
Tariffs could ultimately backfire, said Jeff Vanderpool, the plant manager at Kiswire in Pine Bluff.
"It's going to endanger a high number of jobs in the states," he said.
Lou Ann Nisbett, president and CEO of the Economic Development Alliance for Jefferson County, said earlier this week that the tariffs "would be a huge impact."
"Certainly the fear is that the countries are going to retaliate," said Melvin Torres, director of Western Hemisphere trade for the World Trade Center Arkansas. "I am relieved that, at least for now, Mexico and Canada are not on the list."
Arkansas exports to Canada topped $1.2 billion in 2017. Exports to Mexico reached $847 million, according to the U.S. Census Bureau.
Much of that is agricultural products, particularly rice and poultry.
The timing of the tariffs announcement is unfortunate, said Randy Veach, president of the Arkansas Farm Bureau.
"We're right in the middle of the NAFTA renegotiations. That's not helpful," he said.
"Agriculture in the United States is a potentially likely target for retaliation," said Eric Wailes, distinguished professor and L.C. Carter endowed chair of Agricultural Economics and Agribusiness for UA's Agriculture Division, in a written release. And "Arkansas is a major oilseed and grain exporter to China, Canada, and Mexico among others."
Wailes; Alvaro Durand-Morat, assistant professor of agricultural economics; and technical assistant Leah English analyzed the tariffs' potential impact on rice, corn, soybeans and sorghum exports.
"If the value of Arkansas' oilseed and grain sectors each fell by 14 percent," Wailes said, "the result would be an output loss of $243.7 million in the oilseed farming sector and $191 million in the grain farming sector."
The team said those losses could adversely affect Arkansas employment by around 4,438 jobs, reduce labor income by $261 million and reduce overall value added to the state economy by $383 million.
'DANGEROUS' TARIFFS
After Trump's tariffs signing ceremony Thursday, several lawmakers issued written statements weighing in on the announcement.
U.S. Rep. Steve Womack, a Republican from Rogers, said he was "extremely concerned."
"Instead of inflicting unintended, negative consequences on American businesses, our eyes should be on unfair trading partners, such as China," he said.
Womack started raising concerns last year about possible trade sanctions.
In a letter Feb. 5, he asked Trump to exclude certain steel wire rods from any future tariffs or other trade restrictions.
He wrote that "1080C and 1090C steel wire rod require a very specific manganese content, carbon content, and cleanliness that U.S. wire rod producers are unable to produce using the current method of electric arc steelmaking. If restrictions or high duties are imposed on this particular wire rod, domestic manufacturers that use it as an input, as well as tire producers and automotive suppliers, will have no other choice but to manufacture these precise steel products completely outside of the U.S."
In an interview earlier this week, Womack said the companies are importing the steel because they have no other alternative.
"I totally get the fact that we want to be competitive and that we have countries that are dumping raw materials in this country and distorting the prices. But I just think that the painting with a broad brush and putting a 25 percent tariff on steel and 10 percent on aluminum without taking a holistic look at what you can and can't get domestically is very dangerous," he said.
U.S. Rep. French Hill, a Republican from Little Rock, also signed Womack's Feb. 5 letter.
"I regret President Trump's decision to implement these tariffs because as recent history has shown us, they could ultimately backfire and hurt American workers and consumers," Hill said Thursday after the announcement.
U.S. Sen. John Boozman, a Republican from Rogers, said he doesn't want to see trade tensions further escalate.
"The president has suggested that his policy will be applied with discretion. I encourage him to implement it in a manner that does not result in a situation that will hurt American exporters," he added.
Earlier this week, U.S. Sen. Tom Cotton, a Republican from Dardanelle, said a "targeted and direct action" would be more appropriate than "a shotgun blast."
U.S. Rep. Bruce Westerman, a Republican from Hot Springs, said: "Doing an across-the-board tariff on steel and aluminum, I think, is bad business."
The steel industry has "a lot of economic data" to justify steel tariffs, Crawford said. "The decision wasn't made in a vacuum, and I don't think it was made hastily and I don't think they want to do anything that's punitive to their own customers."
Officials with Nucorp, which has a steel plant near Blytheville, are glad that the White House is taking action.
"Nucor strongly supports President Trump's decision announcing decisive action by imposing tariffs on steel imports that threaten our national security," spokesman Katherine Miller said in an email. "We are pleased that the president has decided to use all the tools at his disposal to send a clear message to foreign competitors that dumping steel products into our market will no longer be tolerated."
Information for this article was contributed by Doug Thompson of the Northwest Arkansas Democrat-Gazette.
A Section on 03/09/2018