President's Column April 2025

07/04/2025

Category: President's Column

Are tariffs bad for business?

The USA is the world's largest importer of steel, counting Canada, Brazil and Mexico as its top three suppliers, and the incumbent President’s view is that by imposing tariffs, which will be paid by companies bringing the steel into the US, there will be a shift away from foreign imports and a boost in domestic steel production. But is this a realistic outcome, at least in the short-term?

The current ‘tariff war’ has simply created a tit-for-tat situation that benefits no-one and is in danger of harming many businesses across the globe. So, as a non-politician, here is my simple suggestion …

In 2024, the USA imported almost 15 million tonnes of steel from its North and South American neighbours, thus it is clearly a product in very high demand and required at a volume that currently cannot be produced internally. So, rather than retaliate with counter-tariffs, why don’t the governments of these countries introduce a temporary measure to halt all supplies of steel to the USA, thus immediately starving the country of an essential product that it clearly cannot do without?

I appreciate that this is far easier said than done, and would require a huge logistical and commercial effort from those countries involved, but I wonder how long it would then be before the tariffs were revoked? Sometimes, political games need to be answered by equally petulant responses.

The UK is not a big supplier of steel to the USA (it currently accounts for around 10% of UK steel exports) but the recent 25% tariffs are bound to have an impact. So, maybe our own government should consider a similar move, thus supporting the UK suppliers that have worked extremely hard to establish a supply of specialist products that are not currently available from domestic USA suppliers.

However, as recently highlighted by both British Steel and Tata Steel executives, a potentially larger consequence of this tariff war may arise from a flooding of cheap steel into Europe and the UK from countries such as China, who already have a surplus of domestically produced steel. This obviously creates a very different challenge to the UK steel industry, so the requests for the Government to take swift action to reinforce safeguarding measures in line with current European Union legislation are therefore completely justified.

This situation could be further escalated by the recent announcement (at the time of writing this column) that the USA is intending to impose further tariffs on any country that buys oil from Venezuela. Last year, Venezuela exported around 660,000 barrels of crude oil per day, with China and India being amongst the top buyers, and it is understood that this tariff would be additional to the 20% tariff already imposed on Chinese imports into the USA.

Ironically, during 2024, the USA itself imported around 250,000 barrels of oil per day from Venezuela, making it the fourth biggest supplier of oil to the country, so it’s obviously a well-thought-out strategy.

Even if this unpopular tariff war does succeed in attracting major investment into the USA to turn it into a manufacturing powerhouse, I am in agreement with the Financial Times’ view that it will take decades to build the infrastructure to deliver it.

So, is it too late to have a sensible debate with those who initiated this ongoing predicament, or are we facing a scenario similar to that of the emperor’s new clothes?
Please note that the views above are entirely my own, and do not necessarily represent those of the BCSA.

Gary Simmons, BCSA President

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