November 23, 2016 / 8:32 PM / 2 years ago

U.S. steelmakers push Trump team for more trade defenses

* Steelmakers see ally in Trump adviser Dan DiMicco

* Protectionist stance could trigger backlash from car makers

By Maytaal Angel and Nick Carey

LONDON/CHICAGO, Nov 23 (Reuters) - The top U.S. steelmakers’ association said it has been in contact with President-elect Donald Trump’s transition team since his election on Nov. 8, as the industry seeks tougher trade defenses under his incoming administration.

Trade restrictions are tantalizing for an American steel industry struggling with foreign competition, but analysts say new measures could trigger a backlash from U.S. carmakers and other consumers who want unfettered access to overseas markets.

“We initially communicated with the transition team prior to the election and are continuing that effort post-election,” said Lisa Harrison, a spokeswoman for the American Iron and Steel Institute (AISI), whose members include ArcelorMittal USA , Nucor Corp, U.S. Steel and AK Steel Holding Corp.

She did not comment on the content of the talks or who was involved, but said Trump adviser Dan DiMicco, a former Nucor chief executive who is the leading contender for U.S. trade representative in the Trump administration, is a strong advocate for the industry.

“We are proud of the prominent role he played in the campaign - and now in the transition,” she said.

DiMicco has accused China, a top world steel producer, of “rampant and destructive trade cheating” in his blog.

Officials in Trump’s transition team did not immediately respond to requests for comment. The New York businessman campaigned on a promise to promote the U.S. steel industry and toughen up trade terms with China and other countries.

U.S. steel traders said they were confident that the industry’s representatives were pushing Trump’s transition team hard for more trade restrictions, and expected that DiMicco was bringing those ideas directly to Trump.

“They have Trump’s ear big-time in the form of DiMicco,” one of the traders said, asking not to be named.

But he added that he expected auto manufacturers to push back: “Eventually its going to backfire massively. Carmakers will start screaming. But for now it’s a question of who lobbies the hardest.”

U.S. steel company stocks have surged 25 percent since Trump’s election victory, fueled by bets for stronger trade defenses, tax cuts and infrastructure spending.

Trump has pledged to spend $1 trillion over 10 years on infrastructure, slash corporate and top-rate individual taxes, redraw trade deals to win back American jobs, and slap punitive import tariffs on Mexican and Chinese goods.

While investors have cheered his tax cut and infrastructure plans, his protectionist stance on trade has some worried. Protectionism stokes inflation and while this might initially help protected sectors like steel, it risks sparking a trade war that could ultimately damage U.S. and global growth.

“Higher steel prices are negative for actual economic activity and the risk for steel in the longer term is that price-sensitive demand could ultimately decrease,” said Jefferies analyst Seth Rosenfeld.

Ford said last week that Trump’s plan to slap 35 percent tariffs on cars and trucks imported from Mexico would hurt the auto industry and the U.S. economy, and has remained committed to making small cars in Mexico despite the tariff threat.

“Frankly these jobs that have left, they’re not coming back and many jobs haven’t left, they’ve been automated,” said a U.S. trade lawyer who represents steel consumers. (Editing by Richard Valdmanis and Jonathan Oatis)

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