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Tariffs On Nails Seek To Remedy Issues Caused By Earlier Tariffs

MICHEL MARTIN, HOST:

The Trump administration is swinging its tariff hammer again, and this time it is hitting nails. The administration is imposing stiff new tariffs this weekend on imported nails and certain other products made from steel and aluminum. The move could address some of the problems caused by an earlier round of tariffs, but critics say those tariffs have already done a lot of damage. NPR's Scott Horsley has this report.

SCOTT HORSLEY, BYLINE: The new tax on imported nails could be a boon for one company, Mid Continent Steel & Wire. The Poplar Bluff, Mo., firm is America's largest domestic nail manufacturer.

CHRIS PRATT: All we're looking for is a level playing field. If everything's even and square, we can compete and we can grow.

HORSLEY: Chris Pratt is general manager for the firm's U.S. operations. He suddenly found himself on a very unlevel playing field two years ago when the administration imposed a 25% tariff on imported steel. Pratt's cost for raw materials shot up, but his foreign competitors could still sell finished nails in the U.S. tariff-free. Pratt lost business and about 200 workers. Almost a year later, his company was finally granted an exemption from the steel tariffs, but Pratt says business hasn't nearly recovered.

PRATT: The unfortunate part about that is losing customers and losing employees. There are a certain percentage and will never come back to you.

HORSLEY: Now, in a tacit acknowledgment of the damage done by the original tariffs, the administration is adding a tax on some imported products made with steel and aluminum. That'll help Pratt's company, but the new tariffs cover only a fraction of the affected industries. Economist Kadee Russ of UC Davis says, by putting American manufacturers at a competitive disadvantage, the original tariffs likely cost the economy some 75,000 factory jobs.

KADEE RUSS: I'm not trying to advocate completely laissez faire economics, but we've seen over and over again over the decades that once you start messing with trade through tariffs, a lot of unanticipated consequences can result.

HORSLEY: Some people did anticipate the factory fallout. H.O. Woltz runs a company in Mount Airy, N.C., that makes steel wire reinforcement products. He sounded a warning two years ago before the original steel tariffs took effect.

H O WOLTZ: We counseled the administration that if they were to take tariff action on raw materials but not on the downstream products, they would create a calamity in the marketplace. And that's exactly what happened.

HORSLEY: Woltz's costs soared, and he lost market share to cheap foreign imports. What's worse - his products are not getting any protection from the new round of tariffs. All of this was supposed to give a boost to America's domestic steel and aluminum producers. But after a brief surge from the tariffs, those metal producers have struggled. Scott Paul, who advocates for steelmakers and steel workers at the Alliance for American Manufacturing, doubts the new round of tariffs will help.

SCOTT PAUL: It's not a significant market mover or, I think, jobs mover for the industry. I wish the administration had considered something far more broad than what it put forward.

HORSLEY: Paul says the real problem is too much steel production in China, which so far the administration's done little to address. So for now, U.S. manufacturers will continue to pay prices for steel and aluminum that are higher than their foreign competitors. Some of those firms will get a boost from their own protective tariffs. Others, like Woltz, the North Carolina wire manufacturer, will just have to keep struggling.

WOLTZ: The current situation is the worst of all worlds. I guess from a larger philosophical point of view, I really don't believe in managed trade.

HORSLEY: Woltz says he'd like to do away with tariffs on both raw steel and finished products, but he concedes that argument is not even worth making to an administration that sees tariffs as a highly effective trade strategy. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.