Posted on 04 Nov 2024
After the US steel supply chain spent most of 2024 reluctant to commit to restocking and long-term investments due to uncertainty over federal policy shifts next year, Election Day finally arrives on Tuesday to lift the cloak.
Voters will choose either Vice President Kamala Harris or former President Donald Trump to lead the executive branch for 2025-2029. Together with Tuesday's simultaneous congressional elections, the makeup of national governance should become clear within a few days.
The ultimate balance of power finally will shed light on the probable demand for steel in the public and private sectors. It could point to which steel items will be winners and losers. If a victorious Trump diverts federal funding from clean energy and other infrastructure in favour of support for oil and gas production, there may be less demand for plate, coated and other flat steel and structural goods and more consumption of OCTG and line pipe (see Kallanish 4 July).
Many steel-related organisations and companies have declined to make formal endorsements. Some steel market participants predict that Trump would be more favourable in promoting manufacturing, stimulating domestic petroleum production and taking a less-aggressive stance on enforcing air-pollution laws at mill sites (see Kallanish 30 August). They argue that the first Trump administration left them better off than before.
“We saved the steel industry in this country, and now we’re going to make it really powerful again,” Trump proclaimed during a rally in Pennsylvania last month.
Harris is credited with supporting on-going federal investments in public infrastructure, semiconductor manufacturing, data centres and the electric grid. The United Steelworkers and United Auto Workers labour unions have endorsed Harris.
“The infrastructure bill alone has made a huge difference in our plant,” says steelworker Bob Tribble, a member of USW Local 1014 at US Steel’s Gary Works. "We make structural steel, and that has kept us busy. It has meant that we are hiring, not pulling back, and it has meant steady employment.”
Harris’ proposals are far less inflationary than Trump’s, according to a large majority of US economists. An October survey by the Wall Street Journal found that 68% of economists think a new Trump administration would cause higher inflation than a Harris presidency, versus 12% who predict that Harris would be worse. High inflation already has hurt demand for steel in the US nonresidential construction industry, which has been particularly vocal about the need for lower interest rates.
Trump’s promises to cut corporate taxes, impose across-the-board tariffs and deport of millions of foreign-born workers heightens the risk of stagflation. US construction associations lament the persistent shortage of available workers (see Kallanish 30 October) and have called for more immigration as one solution (see Kallanish 24 November 2022) to accelerate projects.
Trump proposes cutting corporate taxes to 15%, from the current 21% level set during his first term. Harris prefers an increase to 28%.
Both the Trump and Biden-Harris administrations have targeted Chinese steel by adding tariffs, and the current White House has kept Trump’s Section 232 orders mostly in place. Trump prefers to negotiate bilaterally with other countries, whilst Harris is likely to operate within existing international legal conventions (see Kallanish 1 November). Trump recently threatened to punish companies who move manufacturing to Mexico under the terms of his own United States-Mexico-Canada Agreement (see Kallanish 17 October).
An important member of the Senate Steel Caucus, Ohio Democrat and former caucus chairman Sherrod Brown, is considered vulnerable in a tight re-election race against Cleveland businessman Bernie Moreno.
Source:Kallanish
