California’s largest steel company could be harmed by Trump’s tariffs

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California’s largest steel company is worried it could be harmed by President Donald Trump‘s move to impose 25 percent tariffs on steel imports.

California Steel Industries is the largest steel mill in the Western U.S. and relies largely on imported semi-finished steel, or so-called slabs, as a feedstock for its products. The company employs about 1,000 workers at its plant near Fontana, about 50 miles east of downtown Los Angeles.

“We’ve been operating with this business model for the last 34 years,” Marcelo Botelho Rodrigues, California Steel’s president and CEO, told CNBC in an interview Thursday. “It’s not the slab that’s causing problems for the steel industry in the U.S.”

On Thursday, Trump formally ordered tariffs on imported steel and aluminum, but the move exempts Canada and Mexico. Trump left open the possibility of exempting other countries later.

The White House said the steel and aluminum industries have been harmed by what it called “unfair trade practices and global excess capacity.” The tariff action is expected to go into effect in 15 days.

The California company has been urging the Trump administration to exclude the slabs from the steep tariffs, maintaining in a press release issued earlier this week that “steel slabs are not commercially available in the United States on any consistent basis, nor are they produced anywhere in the Western United States.”

Brazil, Mexico, Japan, China, Russia and Ukraine are major suppliers of slab steel. Slab steel is used to roll into finished products for various markets, including construction, machinery and automotive.

According to Rodrigues, the imported slabs have historically represented just over 6 percent of total steel demand in the U.S. The California company says it doesn’t buy slabs from China and its major suppliers include Mexico, Brazil and Japan.

“What Trump is trying to achieve is to protect American jobs, to protect the American steel industry,” said Rodrigues. “We are part of the American steel industry. We’re part of the solution, not part of the problem.”

California Steel operates from a facility that was once run by Kaiser Steel, which declared bankruptcy in the 1980s. The company has invested nearly $1 billion in its steel mill operations since buying assets from Kaiser Steel.



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