Economist Dr. Loren Scott
Governor Edwards’ suggestion that the closure of Bayou Steel in LaPlace may have been linked to the ongoing trade war with China has sparked controversy and a fierce rebuttal from the Trump Administration.
LSU Economist Dr. Loren Scott says it’s unlikely the closure is tariff-related because tariffs on imported steel are to protect domestic companies not to make things worse.
“If you put a tariff on foreign steel then that means that their steel is going to be more expensive than our steel,” said Scott. “Well, that’s good for them, that’s not bad for them.”
Scott points to the recent growth of Benteler Steel in Shreveport as a counter to the argument that the tariffs have hurt local steel plants.
The Bayou Steel announcement is another blow to the River Parishes that were already hit by the cancellation of a significant project by Wanhua Chemical. Scott says neither appear to be tariff-related.
“There are just some unusual things about those two projects that I think are really things that are internal to the company and, for the most part, have nothing to do with what is going on externally,” said Scott.
Bayou Steel imported scrap metal, specifical steel from China, but the Trump Administration says that import is not under the new tariffs.
But Scott says the steel tariffs are having another detrimental effect. He says the tariffs drive up the overall cost of steel, which may be the reason why a series of new chemical plants have yet to begin construction in Louisiana.
“When you drive up the price of steel, you drive up the total cost of building those plants by a non-trivial amount,” said Scott. “That has got to be something that is causing some of them to pause.”
Scott says there are roughly 100 billion dollars of announced major construction projects that have yet to break ground in the state.
