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American steel manufacturers are excited about the Trump administration's plan to levy 25 percent tariffs on imported steel. They say the tariffs will level the playing field against big steel exporters like China.
But in one Michigan county that voted heavily for Trump, people are worried that tariffs could force a big local plant to shut down.
The town of Big Rapids straddles the Muskegon River as it winds from northern Michigan's hardwood forests to Lake Michigan. A century ago, this town played a key role in the timber industry. Some of the old riverfront lumber buildings remain, like the one that houses Simonds International.
Simonds manufactures blades and knives — really, really big ones.
"They're not your mother's kitchen cutlery," says plant Manager Dave Campbell. "They're anywhere from 8 to 80 pounds [of] hardened steel."
The steel products here, which end up in the lumber industry, are made from a type of steel that isn't produced by any U.S. mill.
"There's only four mills in the world that we're aware of that provide this," says Campbell. "Two are in Europe and two are in China."
Whoever is making a competitive product will have cheaper steel, and that product will then gain market share in the United States.Linda Lim, University of Michigan
Marina McGee buys the raw steel Simonds needs from Europe. "If we could buy it in the U.S., we would happily do that and stop paying all these freight fees and everything else we're paying to bring it in," says McGee.
McGee says a 25 percent steel tariff would be devastating and give Simonds' foreign competitors a big advantage.
"This plant could shut down," she says. "And all 80 employees here — a lot of very good people — could all lose their jobs."
Professor Linda Lim, who studies global trade at the University of Michigan, says that anytime there's a big new tariff on a global commodity like steel, there are winners and losers.
In this situation, Lim says, domestic steelworkers and investors in American steel companies will be the immediate winners. But she is skeptical the advantage will last.
"If Ford and Boeing and Caterpillar lose market share, globally and in the U.S, due to more expensive steel, they will sell less cars, tractors, and planes," she says.
While President Trump's proposed tariffs aren't in place yet, Simonds' workers are worried. Campbell says most of them voted for Trump.
"I think the individuals here that may have supported President Trump will be disappointed," says Campbell. "[They] will be somewhat concerned that some of the actions he's taking may disadvantage them, disadvantage the company they work for, and disadvantage their job prospects down the road."
Simonds is now trying to band together with its suppliers, and even its domestic competitors, to assure that any tariff regulation has an exemption for the foreign-made steel it needs.
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