For many it’s just another day in the Untied States of America, but for the American steel industry things are looking great.
Steelmakers’ share prices surged in the wake of Republican Donald Trump’s election as US President last week, presumably on his commitment to put America first by fighting unfair trade deals and imports. He specifically vowed to “bring back steel.”
On top of that, his commitment to boosting infrastructure spending in a big way is sustaining the outlook for American steel. There would be a lot of steel needed for those new roads and bridges, locks and dams, airports and railways.
Here’s what Morgan Stanley had to say about it this week: “We conservatively estimate Trump’s $550 billion stimulus plan would increase steel demand by 20% annually for 5 years . . . We have analyzed how spending could affect steel use in highways, bridges, buildings (such as airports), rails, and other infrastructure projects. We calculate an incremental 22 million tons of demand in each year the program is in effect.”
Yes, these were merely campaign promises, but big infrastructure spending is looking increasingly plausible in part because so many other issues continue to divide the country, which president-elect Trump said he wants to unite.
What better way to do it than with a national infrastructure program, presumably carried out with all-American steel? You get good-paying jobs, a sense of common purpose, a renewed commitment to public safety and maintenance and an end to suggestions that the eminently First World USA is starting to look like a Third World country.
There may even be a sense of urgency about getting a big infrastructure program off the ground. Americans may continue to lose faith in government given the rocky start to the Trump presidential transition, whose original chief, Chris Christie (with infrastructure problems of his own), has already had his “You’re fired!” moment with Trump.
Then there are the widespread and justifiable criticisms of Trump’s controversial pick of far-right chief strategist Steve Bannon. Already, more than 160 members of the US Congress have urged Trump to rescind Bannon’s appointment because of his ties to the white nationalist movement. And even though the US House and Senate have a Republican majority, passage of legislation around infrastructure and other matters may not be automatic. Economic nationalism is one thing, but white nationalism quite another.
Trump is a builder, so construction is something he understands.
Getting a huge infrastructure program passed by congress is no easy feat. It was denied the Barack Obama administration for years by Republicans, Trump’s own party. But this is the key. We have a “Nixon- to-China” situation here.
Back in 1972, US President Richard Nixon made a surprising move to open relations with Red China. Nixon, a reliably old-school crusader against communism, pulled it off. Could a left-leaning Democrat president have made the historic move? No way. It would have looked too much like accommodation. Ironically, only the hard-liner Nixon had enough cover to make a breakthrough.
Similarly, it seems only a Republican could push through massive infrastructure spending, something politicians of all stripes know in the back of their minds is the single best way to help America.
In other words, if Democrat Obama had succeeded it would have been socialism. If Trump succeeds he’s Making America Great Again.
Platts news and news analysis is independent, objective and neutral.