‘Buy American, Hire American’ might have some impact on U.S. steel

Buy American, Hire American

Executive order of U.S. president, Mr. Donald Trump left a few open questions behind. Trump made a decision about reviewing the U.S. Visa program. Changing the position of high-skilled foreign workers in the country. Putting technology firms and the outsourcing companies that serve them, on notice that possible changes may happen.

Policing “Buy American” provision has been difficult till now. Even if it exists in the U.S. law for a long period. Negations granted to foreign companies that undercut their U.S. counterparts on pricing.

Trump promised to regularly police these provisions, but avoided to tell details about how that is going to happen.

Different Opinions On Subject

President of Chicago-based Lapham-Hickey Steel, Bill Hickey, said: “Talk of Buy American is in the game for decades. Even if so, American or foreign contractors often find loopholes to use imported steel.”

“Politicians all talk the same, but at the end of the day it just doesn’t work.”

Charles Bradford said focusing on “Buy American” for U.S. steel does not take into account that some steel products are not produced in the United States. So if applied improperly, it could cause supply problems in a U.S. market. In which up to 25 percent of steel was imported in the first quarter of this year.

“The people who have pushed for this don’t have a clue and they don’t know math. Cutting off the supply of goods not made in the United States would create fresh problems for U.S. companies.”

Instead of courageous action promised last year by Trump, on the NAFTA , on China, and free trade agreements, the new administration has “not shown much evidence of doing so.” (Said KeyBanc Capital Markets steel analyst Philip Gibbs.)

“I’m a lot less optimistic than I was few months ago. So far what I’ve seen coming out of the Trump administration is the same as the prior administration.”

As a result, Gibbs said investors should dial back expectations that Trump will do anything meaningful on trade, or on infrastructure. Which is where such an order could make a difference.

Investors Reaction

Investors seemed to shrug off Tuesday’s executive order.

Nucor Corp shares closed up 0.2 percent at $57.33, AK Steel Holding Corp gained a penny to end at $6.32 and United States Steel Corp closed down 0.5 percent at $28.73.

Labor Unions

The move was welcomed by labor unions. Workers said that under current practice, “contractors often try to avoid the law through loopholes to buy cheap and often substandard foreign products like many from China.”

Steel Impacts

Thomas Gibson, chief executive of lobby group the American Iron and Steel Institute, said in a statement that “Buy American” provisions “are vital to the health of the domestic steel industry. Also they have helped create manufacturing jobs and build American infrastructure.”

Michelle Applebaum, Veteran steel industry analyst said : “Trump has just created more risk for anyone who wants to import steel. If he puts money behind enforcement that will force people to play by the rules, that will be a good thing.”