The American Iron and Steel Institute (AISI) has maintained a positive outlook on President Donald Trump’s promised infrastructure investment, according to its top executive, but plans to act on that goal still face some obstacles in the near term.
NEW YORK — The American Iron and Steel Institute (AISI) has maintained a positive outlook on President Donald Trump’s promised infrastructure investment, according to its top executive, but plans to act on that goal still face some obstacles in the near term.
AISI president and chief executive officer Thomas J. Gibson outlined key challenges that could stymie efforts for increased infrastructure or transportation funding on the federal level, citing concerns that individual states might fund those measures by turning to their own coffers in the absence of a strong national program.
“What we’re seeing, and I think there’s a danger here, is the state transportation departments lose hope on ever seeing the national program fully funded,” Gibson told American Metal Market, speaking at the Steel Success Strategies XXXIII conference in New York on Tuesday June 26.
“They are increasingly looking to their own means, and that could end up meaning that if they use state funds then federal rules don’t apply - including the ‘Buy America’ requirements for transportation,” he said.
“State transportation directors need a robust federal program, and there’s a large consensus on that in the business community, among state officials. But the stumbling block is how do you pay for it? And there you have the political reluctance to engage on anything that looks [like] or could be construed as a gas tax,” Gibson warned.
“User fees will have to a part of the dialogue,” he pointed out. These charges - such as highway tolls - can be part of a bipartisan effort to develop and fund infrastructure changes.
“Without a method to pay for it that isn’t smoke and mirrors, that is real and doesn’t add to the deficit, it’s going to be hard to get [an infrastructure bill] done. But I’m cautiously optimistic,” Gibson said.
He also recalled the role infrastructure development played in Trump's 2016 presidential campaign, adding that revamped domestic roads and bridges would support short-term projects as well as the long-term health of the US steel industry.
“It needs to get done,” Gibson added. “Transportation and infrastructure spending is one area of steel demand that has never recovered to pre-recession levels.”
232 and Nafta
On the subject of the Section 232 tariffs implemented against steel imports from Canada, Mexico and the European Union on June 1, Gibson was adamant that the tariffs must be left in place for the long term in order to return the industry to sustainability and to address the roots of the global oversupply problem.
“I can’t tell you if that’s going to be six months, a year, two years - but it will need to be for a significant period of time,” he said. “You’ve got to force the people who created the overcapacity to internalize the cost of that, and right now they’re externalizing the cost.”
Before a discussion about lifting the 232 tariffs can begin, other countries must end subsidies on steel exports, and preventative measures must be established to protect importers from becoming a dumping ground for excess product, Gibson argued.
“If you take 232 away tomorrow, we’re right back where we started,” he said.
Regarding the North American Free Trade Agreement renegotiations, Gibson acknowledged that the retaliatory measures taken by Canada and Mexico to counter the 232 will factor into those discussions. Still, he felt the Trump administration should be given the latitude to secure better trade deals.
“I don’t think we should tie the president’s hands,” he said. “I think we should allow the president and his negotiators to finish the Nafta negotiations.”
Gibson was confident that the mutual interests of the three trading partners would override any political tensions and, eventually, lead to a deal that would maximize opportunities for North American steel.
“The economies are interrelated, and the Canadian and Mexican markets are important for US producers,” Gibson said.