Caught in a trade war
STAMFORD — The city is modernizing the intersection at Atlantic and Henry streets, but something will be decidedly old-fashioned.
The supports for the traffic signals will be made of wood.
It will be the case, at least, until the steel supports arrive, perhaps in January.
Steel traffic arms used to be delivered in 12 weeks, but now it’s 12 months, Transportation Bureau Chief Jim Travers said.
They got caught up in a trade war.
“The steel tariff is creating delays,” Travers said of the duty on imported steel imposed by President Donald Trump in June. “Everyone is watching this. There’s only so much steel you can get. You hear it from everyone doing signal installations — there’s a challenge now.”
Travers said he doesn’t want to hold up the road project at the South End intersection, which is being realigned and re-signaled and was supposed to be finished this fall. So work will proceed with wooden utility poles substituting, for a while, for steel.
“We’re going to pour the foundation where the mast arms are supposed to be, and put up a temporary wooden span until the steel comes in,” Travers said. “For the long term, you need steel mast arms. They hold up better in storms. They can span an adequate distance. They last much longer. They don’t sway in a breeze on a windy day.”
If only you can get them.
The problem has its origins in the 2016 presidential race, when then-candidate Trump made an issue of America’s disappearing manufacturing jobs. The number of jobs dropped 25 percent in the last two decades, and countless steel and aluminum production plants closed.
After Trump became president he said the loss of steel and aluminum production threatens national security, and decided the solution is tariffs, which are supposed to help American companies by setting a charge on the products of foreign competitors.
In June, the Trump administration set a 25 percent tariff on steel and a 10 percent tariff on aluminum. Prices immediately jumped 23 percent, the Washington Post reported in July.
Travers said he is watching to see how it will play out.
“This is one of the first orders we put in after the tariffs,” he said. “We have to wait to see if this type of delay is an anomaly, or what we can expect with prices going forward.”
Prices could be a bigger problem, he said.
“This project was put out to bid before the tariffs, so I have not seen the implications for the city at this point,” Travers said. “I know that Bridgeport went out to bid with a new project and it came back high enough that it caused them to go out to bid again to bring the cost down.”
There are implications for every city, he said.
“We’re set to do six signal replacements, so we’ll see what it all means at the start of 2019, when it goes out to bid,” Travers said. “We may have to do five signals instead of six. That’s still to be seen.”
The tariffs could affect the cost of road projects significantly. The Washington Post reported that steel and aluminum prices shot up 45 percent between the start of the year and July, the month after the tariffs kicked in.
Tariffs have a way of ratcheting up costs, Travers said.
“If foreign steel comes at a higher price, it drives up the domestic price, which then drives up the foreign price, which drives up the domestic price some more,” Travers said. “It’s the ultimate Catch 22.”
The Post story cited a study by Trade Partnership Worldwide, a firm that provides analyses to governments and corporations on the economic effects policies have on trade.
The study projected that the number of jobs in steel and aluminum production could grow by more than 25,000. But 400,000 jobs in industries that make products from steel and aluminum could be lost because companies would have to pay so much more for metals, the study projected.
It’s a function of employment numbers, according to the Post. There are 313,000 jobs in steel and aluminum production, but many more jobs — 5.1 million — are in industries that manufacture products from the metals.
Those industries would not only pay more for imported metals priced up by tariffs, they would pay more by buying American metals, which are more expensive because U.S. workers earn higher wages than most foreign workers.
Beyond the potential industry losses are the effects on governments, such as Stamford’s, seeking to fix road intersections.
Atlantic and Henry streets is the first project to signal what could end up being substantial delays and cost overruns. Travers said he’ll know more in the coming weeks.
“What I can say now is delivery is taking substantially longer, and tariffs create higher prices,” he said. “It’s a concern.”