Why two Philly area trade warriors cheer for Trump’s tariffs; It’s about saving factories

President Trump has finally found something that can unite corporate-friendly Republicans and Democrats in Washington: opposing his tariffs on "national security" products like steel.

Trump's plan, based on "false pretense," will "hurt American workers, families, and employers," said Sen. Pat Toomey (R., Pa.)  last week, endorsing a bill to limit presidential tariff powers.

Trump tariffs have a "staggering negative impact" on jobs and bosses, added Sen. Jeff Flake (R., Ariz.). Trump is "abusing" U.S. trade law, added Sen. Bob Corker (R., Tenn.). Trump's trade policy is "wrongheaded," said Sen. Heidi Heitkamp (D., N.D.). Trump is making a "big mistake," adds Sen. Lamar Alexander (R., Tenn.). "Time for Congress to reclaim its constitutional authority," said Sen. Ron Johnson (R., Wis.).

But away from Washington, Trump's tariffs seem a lot more popular, at least among people who have spent years wrestling with U.S. and foreign suppliers.

To be sure, "these tariffs will make a handful of people wealthy. In the long run, they will raise the price of steel," says Mike Amato, CEO of Camden Yards Steel, which finishes  U.S.-made and imported carbon steel at his works in Camden and West Columbia, S.C.

But "there has to be some effective mechanism for balancing out what those subsidized steel mills in other countries are dumping here," Amato told me. "Our manufacturing has dwindled away." Among the last local steelmakers, ArcelorMittal's old Lukens plate plants in Coatesville and Conshohocken "are pretty much shuttered; Evraz in Claymont is gone."

He listed East Coast lamp plant customers that shut in recent years: "Columbia in Bristol, they're gone. Mark Lighting in Edison, N.J., gone. Linear Lighting in New York, gone just last year." He's hoping that New York's Neo Lights will at least keep running its newly acquired SimKar Lighting plant in Olney as it adds LEDs to its fluorescent lines. Protection from Washington would help.

He blames NAFTA: "Since the North American Free Trade Agreement (1995), the manufacturers move to Mexico and pay a fraction of what they paid here." His visits to Juarez have made a serious impression: "The plants are big and magnificent. They pay people a lot less. You can't support our lifestyle that way. It's terrible."

Alexander Hamilton and other early U.S. friends of industry pushed high protective import fees to help infant U.S. factories. After World War II, when European and Asian factories were blasted, it made sense for Americans to back free trade. But factories need protection again or they'll keep closing, Amato argues, though he also notes it's hard to find young Americans to show up for factory jobs, even at what he considers competitive wages and benefits.

Harry Miller read my column on Trump's "trade war" last week and cheered. "I was in a trade war for 30 years" before retiring in 2000 as a director of DuPont's former Global Polyester Films business, Miller told me.

He sold made-in-America computer disks to big Asian electronics manufacturers. He got tired of seeing Americans lose. "What's happening with Trump is fantastic."

Isn't he worried that Trump's tariffs on our allies' steel and aluminum products will drive up prices for American consumers? And that Mexico's retaliatory tariffs on Pennsylvania steel and apples, Hershey chocolates, and Ocean Spray cranberries — along with Canadian tariffs on metals, chocolate, whiskey, and mayonnaise as well as planned European tariffs — will drive down U.S. factory orders, slowing the economy just as it was speeding up?

It's not an easy fight, Miller allowed. "But I don't think the news media understands what has been going on in business around the world."

"We lost so many factories, because in many, many places the exchange is fundamentally unfair. When I sold into Korea, to Samsung or Lucky Goldstar, I had to pay 24 percent tariffs," an extra expense for U.S. goods exported to Korea. But when the Koreans sold Americans their products, "they only had to pay 6 percent."

So American disks cost a net 18 percent extra, all other costs being equal. But they weren't equal: There were also local fees, special transportation costs — "all those other games that they play and we don't. When you add that, it was more like 27 percent," Miller said.

At those rates, tariffs made it cheaper for DuPont — and its U.S. rivals and successors — to manufacture in Asia: "Rather than put another manufacturing line in Hopewell, Va., they put the new plant in China, updated some of their machines, and moved them there," Miller said. "We were getting [worked over] eight ways til Sunday."

I reminded him treaties like the 2012 U.S.-Korea Free Trade Agreement, implemented after he retired, were designed to equalize tariffs, the same thing that Miller said ought to be Trump's goal. But Miller was adamant: too often U.S. trade agreements that were supposed to strengthen U.S. companies against China and other competitors shifted jobs out of the U.S. and to our smaller allies — which doesn't directly help American workers.

And it wasn't just the national tariffs or the local nuisance fees, Miller added. "It's also the theft of intellectual property." Open-door America welcomes foreign customers. But sometimes they brought spies, stealing proprietary information. "The Japanese were doing it big-time when I was there. Almost daily, we took people through our plants. In Dothan, Ala., where we were making floppy disks, we found this one guy straggling along behind the tour. He has a notebook. He's copying temperatures and processes." (Taiwanese and South Korean nationals, among others, have been convicted of criminal charges for stealing technology from DuPont in recent years.)

Miller doesn't expect an industrial renaissance from DuPont's merger with Dow Chemical Co. and their planned breakup into Corteva (pesticides and seeds) and other successor companies. He says investors and top bosses tend to profit from those big breakups. Employees and customers, not so much.

But overall, he's "optimistic" for America. Under Trump, Congress has simplified taxes, cut back on "nutcase" regulations (which Miller is quick to blame on both parties), and is now trying to give the remaining U.S. factories a better chance.

Miller's enough of a believer that he's moved some of his retirement money to Fidelity's defense and industrial fund. "It's not going to be perfect. But it's going to be better," he concluded. "We still dominate technology. And we haven't had an economy where taxes were going down and regulations were improving since Reagan. Now let's fix our trade."