The trade war has arrived in Louisiana.
Bayou Steel Group, one of the largest employers in St. John the Baptist Parish, announced last week it will shutter the plant and lay off 376 workers by the end of November.
This is precisely the kind of thing many in the state have warned about for more than a year, as Washington imposed tariffs on imported steel and aluminum and launched a broader trade war that has interrupted supply chains, driven up costs and sparked retaliatory tariffs from other countries.
Trade accounts for 42% of Louisiana’s gross domestic product, the highest of any state, as of 2017, the most recent year for which data is available.
In the specific case of Bayou Steel, it was noted that “this company, which uses recycled scrap metal that is largely imported, is particularly vulnerable to tariffs. Louisiana is among the most dependent states on tariffed metals, which is why we continue to be hopeful for a speedy resolution to the uncertainty of the future of tariffs.”
The administration used Section 232 of the Trade Expansion Act of 1962 to justify the tariffs on questionable national security grounds. The United States suffers no shortage of steel, and the Pentagon does not impose a major demand for steel, requiring only 3% of U.S. production.
The idea was to help the steel industry. It hasn’t worked.
U.S. Steel Corp. announced over the summer that it was shutting down blast furnaces in Gary, Ind., and Detroit, citing lower prices and softer demand. NLMK Pennsylvania laid off 80 workers because it couldn’t get enough slabs to keep its mill operating at capacity.
Certainly, many factors are at work anytime a business lays off workers or shuts down. But tariffs on steel certainly played their part in St. John the Baptist Parish. Now the people who work there are paying the price.
"It’s going to be pretty difficult (but) because my wife may be able to get insurance through her job, she's a schoolteacher. If it wasn't for her I don't know what we would be able to do right now,” said Charles Gill, who said he went to work at Bayou Steel 25 years ago.
Peter Ricchiuti, a business professor at Tulane University's Freeman School of Business, says the closure bodes ill for others in the industry.
“I think the tariffs just killed them,” he told The Times-Picayune | New Orleans Advocate. “And if they threw in the towel, there have to be a lot of traditional steel mills out there where they’re thinking the same thing in the executive boardrooms.”
Before it gets worse, Congress needs to act.
Tariffs are taxes on Americans. Lawmakers should have a voice in deciding who pays, and how much.
Sen. Charles Grassley of Iowa, chairman of the Finance Committee, is working on legislation that would give lawmakers a vote when the president imposes or raises tariffs.
That would be a good start toward Congress reclaiming its constitutional role in tariff policy, and Sen. Bill Cassidy, R-Baton Rouge, a member of the Finance Committee, has the opportunity to champion the measure. The economic well-being of our state could depend on it.
John Kay is state director of Americans for Prosperity of Louisiana.