West Virginia isn’t as invested in the steel and aluminum industries as it used to be, reflecting a nationwide trend, but countries retaliating against steel and aluminum tariffs recently imposed by President Donald Trump’s administration could spell long-term trouble for the state’s economy.
The Trump administration announced Thursday that it will impose a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum from the European Union, Mexico and Canada. They were originally exempt from the tariffs, which had already taken effect for other nations in March.
The White House said the tariffs protect the national security of the United States, adding that the tariffs “have already had major, positive effects on steel and aluminum workers and jobs and will continue to do so long into the future.”
John Deskins, director of West Virginia University’s Bureau of Business and Economic Research, said the tariffs won’t amount to much in West Virginia by themselves.
But with the affected countries looking to retaliate by imposing tariffs of their own on U.S. products, Deskins said the fallout from the move could hit West Virginia much harder.
“For 2017, exports amounted to about 10 percent of everything we produced in West Virginia — that’s a big chunk,” he said.
Chief among the state’s exports is bituminious coal, which made up more than 45 percent of the state’s exports in terms of dollar value in 2017, according to U.S. Census Bureau data.
If tariffs on U.S. coal exports are created as a result of the Trump administration’s move, West Virginia would be hit in a flagship sector that has already seen a long-term decline, Deskins said.
“Demand for coal domestically is not growing,” Deskins said. “Our hope is overseas, and if the other countries retaliate with tariffs like in coal, that could really hurt West Virginia.”
Canada is by far West Virginia’s top trading partner, and the country has released a list of U.S. goods subject to countermeasures in response to the decision, set to take effect July 1.
Based on dollar value, Canadian products made up 37.5 percent of West Virginia imports last year, while 21.3 percent of West Virginia exports went to Canada, according to U.S. Census data.
The move comes as the U.S. has held talks with Canada and Mexico on a rework of the North American Free Trade Agreement. But those negotiations were “taking longer than we had hoped,” the AP reported Commerce Secretary Wilbur Ross as saying.
Rebecca McPhail, president of the West Virginia Manufacturers Association, said she is still piecing together what the tariffs will do for industry in the state. As of Friday, she hadn’t heard from the association’s member companies on how they feel, either.
“I guess they’re trying to figure out what this means,” she said.
The state’s steel and aluminum industries have fallen off in recent years “due to foreign competition,” McPhail said, adding that creating a more competitive environment for U.S. companies is a good thing.
But McPhail worries that the optimism U.S. manufacturers have experienced recently could fade due to retaliatory tariffs from other countries.
“We’re at this intersection in the state where a lot of positive things are happening,” she said. “We just don’t want to delay that, or even cancel it, because of this particular issue.”
The American Iron and Steel Institute, meanwhile, praised the White House’s move without reservations. A handful of the group’s member companies have operations in West Virginia, including ArcelorMittal North America’s Weirton and Princeton locations.
“The U.S. producers of AISI fully support the administration’s position that any country that is granted an exemption from the tariffs must be subject to a quota, in order to safeguard against the exempt country becoming a conduit for trade diversion, transshipment and import surges,” said Thomas Gibson, AISI president, in a statement.
The AISI says the steel industry has generated nearly 2,000 jobs in West Virginia, while supporting 13,300.
Other national groups with West Virginia ties, meanwhile, criticized the decision. A spokeswoman for Toyota Motor Manufacturing West Virginia, which has operated a plant in Buffalo for 21 years, referred to a statement from the Alliance of Automotive Manufacturers for its stance on the matter.
“Automakers already source the majority of their steel and aluminum from U.S. producers,” the statement says. “However, these tariffs will result in an increase in the price of domestically produced steel — threatening the industry’s global competitiveness and raising vehicle costs for our customers.”
The statement continued by saying the alliance encourages “a careful re-evaluation of these tariffs so they address legitimate concerns while not harming the users of these critical materials.”
In a statement of its own, the United Steelworkers union criticized the White House for removing Canada’s exemption from the tariffs. The union represents workers in various West Virginia industries, including workers at ArcelorMittal’s production facility in Weirton and workers at Mylan’s Morgantown plant.
There “is no stronger ally and partner on national security” than Canada, the USW said.
“The regular chaos surrounding our flawed trade policies is undermining the ability to project a reasoned course and ensure that we can improve domestic production and employment,” the USW said. “Today’s decision is wrongheaded and erodes the certainty companies need to conduct operations and invest in the future.”
But Mark Glyptis, president of the local USW 2911 in Weirton, said the tariffs are “long overdue” and should have been implemented decades ago. Glyptis said steel industry jobs won’t return to what they were at their peak, but the tariffs should at least “stop the bleeding” for steelworkers and provide “somewhat of a rebound” for area companies struggling.
The state’s northern panhandle is home to several facilities linked to the steel industry, like Harsco Minerals in Moundsville and Mountain State Carbon in Follansbee.
Glyptis said any potential price increases that would be passed down to consumers would be minuscule and worries of a trade war are “not justified.” He added that the U.S. has enough economic strength to handle retaliations from other countries.
“In our area, you’d be hard pressed to find anyone against them,” he said.