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Texas, Louisiana expected to lose trade war. Oil Industry prepares for worst

Logan Hawkes 1, Contributing Writer

March 13, 2018

7 Min Read
Farm equipment costs expected to rise as a result of steel and aluminum tariffs.

A review of industry reactions to President Trump’s steel and aluminum tariffs shows most U.S. industries likely will suffer economic hardships because of the tariffs, with potential for extensive job losses and the possibility of some manufacturing sites moving offshore.

Here’s a sampling of various industry responses.


Overwhelmingly, agricultural leaders, both in industry and government, have warned that imposing tariffs on imported products is a risky decision. One of the leading reasons behind that opinion, voiced by dozens of state farm groups and leading agribusiness leaders, is that U.S. agriculture depends heavily on smooth and worry-free trade relations to market U.S. farm goods. Already, U.S. trade partners have threatened tariffs on U.S. farm products, especially considering the growing tensions between Canada, Mexico and the U.S. over renegotiating NAFTA, a major advantage to agriculture.

 Automobile and Auto Parts Industry

According to CNN Money, the Motor & Equipment Manufacturers Association, which represents companies that make vehicle parts in the United States, has said the tariffs will make cars more expensive and could put many of the more than 800,000 jobs in its industry at risk.

Aircraft Technology and Manufacturing

The nation's largest single exporter of aircraft uses aluminum and many steel parts to manufacture aircraft and market worldwide. The aircraft giant reports it could also suffer if other countries decide to retaliate against U.S. tariffs by purchasing aircraft from international competitors like Airbus.

The company has more than 140,000 employees in the United States and around the world.

U.S. Brewing Industry

Anheuser-Busch, makers of Budweiser products, and Molson Coors, the maker of Coors Light and Miller Lite, agree that the rise in the cost of aluminum puts their industry at risk. Anheuser-Busch alone has warned that it could threaten manufacturing jobs across the industry, including many of its 18,000 employees in the United States. Coors Molton tweeted last week that rising prices will "likely lead to job losses across the beer industry," including many of its 17,200 employees globally, many of them living and working in the United States.

A spokesman for the craft beer industry also indicated the new tariffs will threaten its ability to compete in the U.S. market as their inability to buy aluminum in bulk will increase the difficulty in competing with large breweries.

Large equipment manufacturers

Caterpillar is the first of many large equipment manufacturers to voice concern over the inevitable rise in the cost of raw steel products that will likely result from the new tariffs. CAT suggests construction equipment could get more expensive soon if steel and aluminum prices rise substantially, as expected.

It's not just construction equipment that could be adversely affected. Makers of buses, trains and agricultural equipment like tractors, strippers and combines, may feel the pinch and are expected to raise prices.


Bloomberg is reporting that an executive at Dow/DuPont says it might need to start building plants in Canada or Argentina if the cost of construction goes up too much in the United States. That could mean not only a loss of U.S. jobs, but also a loss for the economies for cities where their U.S. properties are located.

Dow/DuPont employs an estimated 98,000 employees.

Energy and Oil Industries

Fortune Magazine is reporting that the International Energy Agency (IEA) last week released a statement indicating the U.S. will likely overtake Russia to become the world’s largest oil producer by the year 2023, the result of domestic crude production predicted to reach 12.1 million barrels per day. But the oil industry has warned that the President's steel tariffs could derail the country's energy boom by raising prices on foreign steel, which oil companies use extensively in drilling and production, and in pipeline and refining industries as well.

"This is going to make us less competitive against OPEC," Dan Eberhart, CEO of oilfield services company Canary LLC, told CNNMoney last week.

Eberhart "is a big Republican donor and a vocal Trump supporter who applauds the administration's energy policy, tax law and economic agenda." However, CNN reports the oil executive is getting nervous about Trump's efforts to revive the beleaguered steel industry with a 25 percent tariff on imports.

"The administration is asking us to fight with one hand behind our back. It runs contrary to the push for energy dominance," he said. Eberhart warned that higher costs will force his company to lay off up to 17 percent of his U.S. workers.

The comments echoed criticism from the American Petroleum Institute, a powerful oil industry lobby. The Institute warned last week that tariffs "could create confusion in supply chains, unnecessary costs" and "threaten high-paying industry jobs."

The resulting rise in energy prices would also affect almost all other industries in the U.S.

Ford/General Motors

Auto manufacturers rarely agree on political issues publicly, but representatives of both companies  report that the higher cost of steel and aluminum will increase the cost for some automakers significantly. In a statement last week, Ford said "tariffs could result in an increase in domestic commodity prices—harming the competitiveness of American manufacturers."  General Motors responded with less concern, indicating most of the steel and aluminum products it uses in the manufacturing process comes from American steel sources.

The two automakers employ over 280,000 employees in the auto production industry.

Home Appliance Industry

Whirlpool recently got a boost when President Trump imposed tariffs on imported washing machines. But news agencies are collectively reporting manufacturing costs of washing machines, clothes dryers and refrigerators will become more expensive to make in the United States, increasing the cost of appliances to consumers.

Whirlpool has about 92,000 employees.

U.S. Red States to suffer

It’s not just industry that is expected to suffer from new trade tariff policies.

The Brookings Institute reported last week that trade tariffs will adversely affect several U.S. states, not the least of which will be Red States. Brookings is a nonprofit public policy organization based in Washington, D.C. that conducts in-depth research that leads to new ideas for solving problems facing society at the local, national and global level.

The Washington-based research think tank writes:

“In a country as large and economically diverse as the United States, these macro policy shocks have local consequences and, once again, America’s local and state economic officials are asking how this latest trade policy shift will influence their own economies.”

Researchers at Brookings expect retaliatory tariffs from other countries on key American export industries. While it is unclear how many other countries will respond with retaliatory measures, Canada, China, and the European Union (EU) have all signaled they will respond by increasing tariffs on American-made products, potentially curbing exports.

In addition, they suggest the second response mechanism to Trump’s tariff policy could be manifested through the ripple effects of higher prices for steel and aluminum.

In 2017, imports of steel and aluminum goods covered within the scope of the U.S. Commerce Department’s Section 232 investigation totaled nearly $48 billion, or about 2 percent of total U.S. imports. Steel imports were a little over $29 billion while aluminum flows were about $19 billion.

When Brookings measured by total volume, the nation’s largest states dominate steel and aluminum imports. Texas, California, Illinois, Michigan, Louisiana, Pennsylvania, Ohio, and New York all import more than $2 billion annually in steel and aluminum products, together accounting for 60 percent of the nation’s total. Aside from Texas, California, and Louisiana, these states concentrate in the Northeast and Midwest’s Rust Belt. Given the large size of their economies, disruptions to trade in these states have significant potential to influence national economic growth and key industry sectors like automotive manufacturing, chemicals, and oil and gas production.

“The inclusion of NAFTA in the tariffs would be particularly hard for state economies most dependent on Canada and Mexico. Michigan, for instance, relies on NAFTA for more than 70 percent of its steel and aluminum products. These imports support the state’s automotive and metalworking clusters, which together employ 230,000 workers,” Brookings reported.

Of greater economic concern, perhaps, will be oil and gas production and shipping in Texas and Louisiana where a large percentage of steel and aluminum is transported through shipping points in New Orleans and Houston, and in Corpus Christi.

Editor’s Note: President Trump said Canada and Mexico would be excluded and other countries could negotiate exemptions.


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