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Japan Today
29-07-2025
- Business
- Japan Today
Trump's tariffs could squeeze US factories and boost costs by up to 4.5%, a new analysis finds
FILE - President Donald Trump talks to workers as he tours U.S. Steel Corporation's Mon Valley Works-Irvin plant, Friday, May 30, 2025, in West Mifflin, Pa. (AP Photo/Julia Demaree Nikhinson, File) By JOSH BOAK and PAUL WISEMAN As President Donald Trump prepares to announce new tariff increases, the costs of his policies are starting to come into focus for a domestic manufacturing sector that depends on global supply chains, with a new analysis suggesting factory costs could increase by roughly 2% to 4.5%. 'There's going to be a cash squeeze for a lot of these firms,' said Chris Bangert-Drowns, the researcher at the Washington Center for Equitable Growth who conducted the analysis. Those seemingly small changes at factories with slim profit margins, Bangert-Drowns said, 'could lead to stagnation of wages, if not layoffs and closures of plants" if the costs are untenable. The analysis, released Tuesday, points to the challenges Trump might face in trying to sell his tariffs to the public as a broader political and economic win and not just as evidence his negotiating style gets other nations to back down. The success of Trump's policies ultimately depends on whether everyday Americans become wealthier and factory towns experience revivals, a goal outside economists say his Republican administration is unlikely to meet with tariffs. Trump has announced new frameworks with the European Union, Japan, the Philippines, Indonesia and Britain that would each raise the import taxes charged by the United States. He's prepared to levy tariffs against goods from dozens of other countries starting on Friday in the stated range of 15% to 50%. The U.S. stock market has shown relief the tariff rates aren't as high as Trump initially threatened in April and hope for a sense of stability going forward. Trump maintains the tariff revenues will whittle down the budget deficit and help whip up domestic factory jobs, all while playing down the risks of higher prices. 'We've wiped out inflation," Trump said last Friday before boarding Marine One while on his way to Scotland. But there's the possibility of backlash in the form of higher prices and slower growth once tariffs flow more fully through the world economy. A June survey by the Atlanta Federal Reserve suggested companies would on average pass half of their tariff costs onto U.S. consumers through higher prices. Labor Department data shows America lost 14,000 manufacturing jobs after Trump rolled out his April tariffs, putting a lot of pressure as to whether a rebound starts in the June employment report coming out Friday. The Washington Center for Equitable Growth analysis shows how Trump's devotion to tariffs carries potential economic and political costs for his agenda. In the swing states of Michigan and Wisconsin, more than 1 in 5 jobs are in the critical sectors of manufacturing, construction, mining and oil drilling and maintenance that have high exposures to his import taxes. The artificial intelligence sector Trump last week touted as the future of the economy is dependent on imports. More than 20% of the inputs for computer and electronics manufacturing are imported, so the tariffs could ultimately magnify a hefty multitrillion-dollar price tag for building out the technology in the U.S. The White House argues American businesses will access new markets because of the trade frameworks, saying companies will ultimately benefit as a result. 'The 'Made in USA' label is set to resume its global dominance under President Trump,' White House spokesman Kush Desai said. There are limits to the analysis. Trump's tariff rates have been a moving target, and the analysis looks only at additional costs, not how those costs will be absorbed among foreign producers, domestic manufacturers and consumers. Also, the legal basis of the tariffs as an 'emergency' act goes before a U.S. appeals court on Thursday. Treasury Secretary Scott Bessent said in an interview last week on Fox Business Network's 'Kudlow" show countries were essentially accepting the tariffs to maintain access to the U.S. market. 'Everyone is willing to pay a toll,' he said. But what Bessent didn't say is U.S. manufacturers are also paying much of that toll. 'We're getting squeezed from all sides,'' said Justin Johnson, president of Jordan Manufacturing Co. in Belding, Michigan, northeast of Grand Rapids. His grandfather founded the company in 1949. The company, which makes parts used by Amazon warehouses, auto companies and aerospace firms, has seen the price of a key raw material — steel coil — rise 5% to 10% this year. Trump has imposed 50% tariffs on imported steel and aluminum. Jordan Manufacturing doesn't buy foreign steel. But by crippling foreign competition, Trump's tariffs have allowed domestic U.S. steelmakers to hike prices. Johnson doesn't blame them. 'There's no red-blooded capitalist who isn't going to raise his prices'' under those circumstances, he said. The Trump White House insists inflation is not surfacing in the economy, issuing a report through the Council of Economic Advisers this month saying the price of imported goods fell between December of last year and this past May. 'These findings contradict claims that tariffs or tariff-fears would lead to an acceleration of inflation,' the report concludes. Ernie Tedeschi, director of economics at the Budget Lab at Yale University, said that the more accurate measure would be to compare the trends in import prices with themselves in the past and that the CEA's own numbers show 'import prices have accelerated in recent months.' The latest estimate from the Budget Lab at Yale is the tariffs would cause the average household to have $2,400 less than it would otherwise have. Josh Smith, founder and president of Montana Knife Co., called himself a Trump voter but said he sees the tariffs on foreign steel and other goods as threatening his business. For instance, Smith just ordered a $515,000 machine from Germany that grinds his knife blades to a sharp edge. Trump had imposed a 10% tax on products from the EU that is set to rise to 15% under the trade framework he announced Sunday. So Trump's tax on the machine comes to $77,250 — about enough for Smith to hire an entry-level worker. Smith would happily buy the bevel-grinding machines from an American supplier. But there aren't any. 'There's only two companies in the world that make them, and they're both in Germany,'' Smith said. Then there's imported steel, which Trump is taxing at 50%. Until this year, Montana Knife bought the powdered steel it needs from Crucible Industries in Syracuse, New York. But Crucible declared bankruptcy last December, and its assets were purchased by a Swedish firm, Erasteel, which moved production to Sweden. Smith beat the tariffs by buying a year's worth of the steel in advance. But starting in 2026, the specialty steel he'll be importing from Sweden is set to be hit with a 50% duty. 'The average American is not sitting in the position I am, looking at the numbers I am and making the decisions each day, like, 'Hey, we cannot hire those extra few people because we might have to pay this tariff on this steel or this tariff on this grinder,''' he said. 'I want to buy more equipment and hire more people. That's what I want to do.' © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Japan Today
16-06-2025
- Business
- Japan Today
Trump administration offers some details of how it would control U.S. Steel, but union raises concerns
President Donald Trump arrives to speak at U.S. Steel Corporation's Mon Valley Works-Irvin plan on May 30, in West Mifflin, Pa. By JOSH BOAK and MARC LEVY President Donald Trump would have unique influence over the operations of U.S. Steel under the terms of what the White House calls an 'investment' being made by Japan-based Nippon Steel in the iconic American steelmaker. Administration officials over the past few days provided additional insight into the 'golden share' arrangement that the federal government made as a condition for supporting the deal. The Pittsburgh-based steel maker and Nippon Steel plan $11 billion in new investments by 2028 after indicating that they plan to move forward with the deal under the terms of a national security agreement that has the White House's approval. The White House has described the deal as a 'partnership' and an 'investment' by Nippon Steel in U.S. Steel, although Nippon Steel has never backed off its stated intention of buying and controlling U.S. Steel as a wholly owned subsidiary in a nearly $15 billion offer it originally made in late 2023. Commerce Secretary Howard Lutnick posted on social media on Saturday how the 'golden share' to be held by the president would operate, revealing that the White House is willing to insert itself aggressively into a private company's affairs even as it has simultaneously pledged to strip away government regulations so businesses can expand. Under the government's terms, it would be impossible without Trump's consent to relocate U.S. Steel's headquarters from Pittsburgh, change the name of the company, 'transfer production or jobs outside the United States,' shutter factories, or reincorporate the business overseas, among other powers held by the president. Lutnick also said it would require presidential approval to reduce or delay $14 billion in planned investments. 'The Golden Share held by the United States in U.S. Steel has powerful terms that directly benefit and protect America, Pennsylvania, the great steelworkers of U.S. Steel, and U.S. manufacturers that will have massively expanded access to domestically produced steel,' Lutnick posted on X. That $14 billion figure is higher than what the companies disclosed on Friday when Trump created a pathway for the investment with an executive order based on the terms of the national security agreement being accepted. Lawmakers from Pennsylvania say the higher figure includes the cost of an electric arc furnace — a more modern steel mill that melts down scrap — that Nippon Steel wants to build in the U.S., bringing the value of the deal to at least $28 billion. The president has the authority to name one of the corporate board's independent three directors and veto power over the other two choices, according to a person familiar with the terms of the agreement who insisted on anonymity to discuss them. The details of the board structure were first reported by The New York Times. Details of the agreement emerged as Trump was traveling to Alberta in Canada for the Group of Seven summit. Still, the full terms remain somewhat unclear. The companies have not made public the full terms of Nippon Steel's acquisition of U.S. Steel or the national security agreement with the federal government. On Sunday, the United Steelworkers, the labor union representing U.S. Steel employees, posted a letter raising questions about the deal forged by Trump, who during his run for the presidency had pledged to block Nippon Steel's acquisition of U.S. Steel. The union said it was 'disappointed' that Trump 'has reversed course' and raised basic questions about the ownership structure of U.S. Steel. 'Neither the government nor the companies have publicly identified what all the terms of the proposed transaction are,' the letter said. 'Our labor agreement expires next year, on September 1, 2026, and the USW and its members are prepared to engage the new owners" of U.S. Steel "to obtain a fair contract.' If Trump has as much control of U.S. Steel as he has claimed, that could put him in the delicate position of negotiating the salary and benefits of unionized steelworkers going into midterm elections. As president, Joe Biden used his authority to block Nippon Steel's acquisition of U.S. Steel on his way out of the White House after a review by the Committee on Foreign Investment in the United States. After he was elected, Trump expressed openness to working out an arrangement and ordered another review by the committee. That's when the idea of the 'golden share' emerged as a way to resolve national security concerns and protect American interests in domestic steel production. As it sought to win over American officials, Nippon Steel made a series of commitments. It gradually increased the amount of money it was pledging to invest in U.S. Steel, promised to maintain U.S. Steel's headquarters in Pittsburgh, put U.S. Steel under a board with a majority of American citizens and keep plants operating. It also said it would protect the interests of U.S. Steel in trade matters and it wouldn't import steel slabs that would compete with U.S. Steel's blast furnaces in Pennsylvania and Indiana. © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Asahi Shimbun
16-06-2025
- Business
- Asahi Shimbun
Nippon Steel shares rise after Trump approves $14.9 billion US Steel bid
U.S. President Donald Trump looks on during a visit at U.S. Steel Corporation–Irvin Works in West Mifflin, Pennsylvania, on May 30. (REUTERS) Nippon Steel shares rose on Monday after U.S. President Donald Trump approved its $14.9 billion bid for US Steel, clearing a key hurdle in its 18-month pursuit and securing access to a vital market for its growth strategy. The approval capped a tumultuous process marked by union resistance and two national security reviews. Shares of Nippon, the world's fourth-largest steelmaker, gained 3% to 2,915 yen by the mid-day break after being untraded with a glut of buy orders earlier in the day. They outperformed Tokyo's benchmark Nikkei 225 index, which was up about 1%. On Friday, Trump signed an executive order allowing the tie-up to proceed, contingent on an agreement with the Treasury Department addressing national security concerns. The companies then announced they had signed the agreement, effectively clearing the deal. The agreement includes $11 billion in new investments by 2028, along with commitments on governance, production and trade. Nippon Steel also confirmed plans to acquire 100% of U.S. Steel's ordinary shares. 'Investors have welcomed the resolution of uncertainty surrounding the deal,' said Shinichiro Ozaki, senior analyst at Daiwa Securities. 'Overall, the agreement appears relatively reasonable in both investment size and timeframe,' he said, noting the acquisition is central to Nippon Steel's medium- to long-term growth strategy. The deal would boost Nippon Steel's annual production capacity to 86 million metric tons from 63 million tons. 'Shares rose on long-term growth expectations, driven by preferential access to the U.S. market, where steel demand is expected to increase,' said Masayuki Kubota, chief strategist at Rakuten Securities. Still, some investors remain concerned about near-term financial strain from the sizable investments. Also, the U.S. government's ownership in the combined company, known as the 'golden share,' has raised questions of the degree of control it can exert. 'While the risk of a capital increase hasn't completely receded, it may be less severe than expected,' Ozaki said, referring to Trump's earlier comment that the steelmaker plans to invest $14 billion in the next 14 months. Ozaki downplayed management risk linked to the golden share, saying 'Nippon Steel anticipates growth in the U.S. market for high-end products, making production cuts and job reductions unlikely.'
Miami Herald
14-06-2025
- Business
- Miami Herald
Trump approves Nippon Steel purchase of U.S. Steel
June 14 (UPI) -- President Donald Trump issued an executive order on Friday officially giving the green light to Nippon Steel Corporation's multi-billion-dollar purchase of U.S. Steel Corporation. Trump's executive order rescinds a directive issued by former President Joe Biden that blocked the Tokyo-based steel producer's $14.9 billion purchase on national security grounds. The president had been signaling he would approve such a move, stating in May that the two steel giants would form a "planned partnership." Trump previously ordered a review of the transaction by the Committee on Foreign Investment in the United States. "Based on the recommendation of and my review of the materials provided by CFIUS, including re-review of the prior assessment of risk, I additionally find that the threatened impairment to the national security of the United States arising as a result of the Proposed Transaction can be adequately mitigated if the conditions set forth in section 3 of this order are met," Trump wrote in the executive order. "President Trump has approved the Companies' historic partnership that will unleash unprecedented investments in steelmaking in the United States, protecting and creating more than 100,000 jobs," Pennsylvania-based U.S. Steel said in a release jointly issued with Nippon Steel. "We thank President Trump and his Administration for their bold leadership and strong support for our historic partnership. This partnership will bring a massive investment that will support our communities and families for generations to come. We look forward to putting our commitments into action to make American steelmaking and manufacturing great again." Trump's executive order requires both companies to enter into a National Security Agreement, which stipulates $11 billion in new investments must be made in the United States by 2028. That includes an already-underway project not scheduled for completion until after 2028. The United States government will also be issued a golden share as part of the NSA, giving it unique voting rights. "President Trump promised to protect American Steel and American Jobs -- and he has delivered on that promise," White House spokesperson Kush Desai told CNN in a statement. "Today's executive order ensures US Steel will remain in the great Commonwealth of Pennsylvania, and be safeguarded as a critical element of America's national and economic security." Confirmation of the deal comes just over a week after 50% tariffs took effect on metals imported into the United States from nearly all countries. The tariffs were enacted a day after Trump signed an executive order doubling the duties on almost all imported aluminum and steel. Copyright 2025 UPI News Corporation. All Rights Reserved.
UPI
14-06-2025
- Business
- UPI
Trump approves Nippon Steel purchase of U.S. Steel
1 of 3 | President Donald Trump issued an executive order, officially giving the green light Nippon Steel Corporation's multi-billion-dollar purchase of U.S. Steel Corporation. File Photo by Archie Carpenter/UPI | License Photo June 14 (UPI) -- President Donald Trump issued an executive order on Friday officially giving the green light to Nippon Steel Corporation's multi-billion-dollar purchase of U.S. Steel Corporation. Trump's executive order rescinds a directive issued by former President Joe Biden that blocked the Tokyo-based steel producer's $14.9 billion purchase on national security grounds. The president had been signaling he would approve such a move, stating in May that the two steel giants would form a "planned partnership." Trump previously ordered a review of the transaction by the Committee on Foreign Investment in the United States. "Based on the recommendation of and my review of the materials provided by CFIUS, including re-review of the prior assessment of risk, I additionally find that the threatened impairment to the national security of the United States arising as a result of the Proposed Transaction can be adequately mitigated if the conditions set forth in section 3 of this order are met," Trump wrote in the executive order. "President Trump has approved the Companies' historic partnership that will unleash unprecedented investments in steelmaking in the United States, protecting and creating more than 100,000 jobs," Pennsylvania-based U.S. Steel said in a release jointly issued with Nippon Steel. "We thank President Trump and his Administration for their bold leadership and strong support for our historic partnership. This partnership will bring a massive investment that will support our communities and families for generations to come. We look forward to putting our commitments into action to make American steelmaking and manufacturing great again." Trump's executive order requires both companies to enter into a National Security Agreement, which stipulates $11 billion in new investments must be made in the United States by 2028. That includes an already-underway project not scheduled for completion until after 2028. The United States government will also be issued a golden share as part of the NSA, giving it unique voting rights. "President Trump promised to protect American Steel and American Jobs -- and he has delivered on that promise," White House spokesperson Kush Desai told CNN in a statement. "Today's executive order ensures US Steel will remain in the great Commonwealth of Pennsylvania, and be safeguarded as a critical element of America's national and economic security." Confirmation of the deal comes just over a week after 50% tariffs took effect on metals imported into the United States from nearly all countries. The tariffs were enacted a day after Trump signed an executive order doubling the duties on almost all imported aluminum and steel.
