The United States’ tariffs on steel imports are indeed improving business at top U.S. steelmaker Nucor, the company’s chairman and CEO, John Ferriola, told CNBC on Tuesday.
The company is currently investing about $3.2 billion in new facilities and fueling organic growth at old ones, Ferriola told CNBC’s Jim Cramer in an interview on “Mad Money.” That includes a $1.3 billion investment in a new steel plate mill in the Midwest, “the heart of the plate-consuming market in the United States,” the CEO said.
But, until the tariffs came into effect, Nucor would’ve had to think twice about spending so much on a new plant, he said. The tariffs, put through in June 2018 by the Trump administration, targeted countries that “dumped” steel into the United States, a practice that involved artificially lowering commodity costs.
“When you look at the amount of plate that was being dumped into this country three, four years ago, it would really cause us to hesitate before making such a large investment,” Ferriola said. “As I’ve said to you many times, … if we had a level playing field, we would compete successfully against any company or country in the world. Getting this level playing field has enabled us to make this investment, create these additional jobs.”
Nucor’s recent earnings results also seem to support the tariffs’ positive effects. On Monday, President Donald Trump tweeted that U.S. tariffs on steel imports “have totally revived our Steel Industry.”
“Tariffs on the ‘dumping’ of Steel in the United States have totally revived our Steel Industry,” he wrote. “New and expanded plants are happening all over the U.S. We have not only saved this important industry, but created many jobs. Also, billions paid to our treasury. A BIG WIN FOR U.S.”
And, if you ask Ferriola, the president might just be right. The CEO told Cramer that not only did Nucor have a “record” fourth quarter and 2018, but so did many steel users.
“2018 was a record year for Nucor, but it was also a record year for many of our customers,” Ferriola said. “In fact, it was a very good year for manufacturing in general. When you look at 2018, right now, the manufacturing sector, as a whole, is on pace to earn its highest-margin profit, profit margin, since the beginning of the 21st century. So the manufacturing industry, as a whole, is doing very well. Our customers are doing very well.”
Nucor shares surged 2.79 percent on Tuesday after the company’s earnings announcement. The stock is still roughly $10 per share off its 52-week high of $70.03.