American Steel Company Gives Raises, Invests Locally Thanks to Tariffs

There is still some debate in both houses of Congress as to whether or not President Biden should lift steel and aluminum tariffs imposed in the Trump years. Barry Zekelman, CEO of Zekelman Industries, says “absolutely not.”

Tariffs have meant millions in new investments for Zekelman, stable jobs and wage growth. In 2020, despite the pandemic, Zekelman’s firm gave another year of $1,000 bonuses for every employee.

“There has been a dramatic drop-off in imports that were hurting the market, displacing workers and putting steel mills and steel plants out of business,” he said. Zekelman does not produce steel from scratch. It makes steel pipes, steel tubes and is an industry leader in modular construction innovations made from steel.

Prices have been on the rise, which may lead the free traders to blame tariffs. That’s the usual strawman argument.

“There is no question that steel prices have gone up recently, but that is because of the massive restocking of the economy that has been happening. You see this with a lot of materials,” he said. Copper is another example. Look at the shortage of semiconductor chips, caused by a combination of lockdown policies worldwide, and the jump-starting of the global economy aching to get back to full speed ahead.

“We need to leave these tariffs in place and need to augment them somewhat because companies are finding a way around them,” he said.

Last week, Zekelman thanked the Biden/Harris administration for supporting the domestic steel industry and not moving to get rid of tariffs, as many of their donors had bargained for last year.

The tariffs that resulted from the Section 232 investigation regarding domestic steel that was conducted under the Trade Expansion Act of 1962 have been critical to leveling the playing field for domestic producers who have been forced to compete against unfairly traded and highly subsidized foreign products.

In a letter to employees last week, Zekelman said that while things are going well within the industry, “without the continued bipartisan support of our steel industry and its consumers, we may slip back to the old days of abuse and attack from foreign bad actors.”

Since the 232 tariffs came into effect, Zekelman increased its capital investments by more than $350 million over historical levels and hired over 400 people to full-time, well-paying jobs in blue-collar cities and towns across the country. They have since paid out over $10.3 million in annual bonuses to all staffers since tariffs were enacted under Trump.

Barry Zekelman, CEO of Zekelman Industries: wage growth, bonuses and job creation, all thanks to tariffs.

Zekelman Industries can trace its history back to 1877, starting out as a distributor of pipe valves and fittings in Philadelphia. Their factory in Wheatland, PA has been around since 1931. Harry Zekelman created a steel tubing company in 1984 that would eventually merge with the 19th-century pipe makers and by 2011, the Zekelman family bought out the merged units. They changed their name to Zekelman Industries in 2016.

They have over 2,700 employees and they still have facilities in Wheatland, as well as Chicago, Birmingham, Alabama; Austin, Texas; Long Beach, California, and 10 small towns across the country.

Many of those smaller units would be gone without the tariff protections required to make it possible to compete with China’s oversupply and state subsidies in numerous other markets.

New Commerce Secretary Gina Raimondo, whose father was laid off from a Bulova watch factory in Providence when she was a young girl, said earlier this month during an interview broadcast on MSNBC that, “The data show that those tariffs have been effective. What President Biden has said is there will be a whole-of-government review of all of these policies and decide what it makes sense to maintain.”

Trump implemented a 25 percent tariff on steel and a 10 percent tariff on aluminum three years ago claiming national-security.

“If you want an infrastructure bill, you’re going to need a healthy US steel industry or you’re going to be importing it all,” said Zekelman.

We don’t need a jobs program for European and Asian steel mills in an infrastructure bill.

Industry groups representing the top steelmakers and the United Steelworkers union urged Biden right after his inauguration to keep steel tariffs. Some manufacturers have called on Biden to end the duties as they import specialized steel from Europe, some of it not made in the US. And lobbyists have tried to argue that it is hurting smaller businesses that have to import that particular steel. Others have said that it hurts Mexico and Canada’s feelings.

CPA does not believe that steel tariffs will harm relations between the US and its prime allies as there is much more to the relationship than steel and aluminum. Each country should also understand the imperative of national security and economic security as we try to dig ourselves out of the hole the pandemic has put us in.

We hope that Raimondo and the Biden administration keep these tariffs, keeping in mind that a strong domestic economy is not only a matter of national security but is also a matter of public health as Zekelman pointed out.

“We have not cut wages for 35 years and have only been increasing them,” he said. “We have incentive programs for bonuses based on production; they get top-quality healthcare and we can fund our pension for those still on that. Tariffs led us to invest. That gives people that work in these facilities the visible notion that we are in this for the long haul. That’s economic security for them. That’s economic security for a town, and that means with jobs like that you get families staying together, you get fewer instances of crime, and less drug addiction,” he noted. “The alternative is to import it all to the detriment of American jobs and personal wellbeing.”