- The U.S. Commerce Department recommends a 25 percent tariff on steel imports, a move President Donald Trump said he supports.
- But the move could spark a trade war, says Charles Bobrinskoy, vice chairman and head of investment group at Ariel Investments.
- "It's better for the world if we don't have tariffs," he says. But "there are some core Trump constituents who really want to see less imports."
Steel tariffs could spark a trade war, says Charles Bobrinskoy, vice chairman and head of investment group at Ariel Investments.
"It's another one of those things that is potentially dangerous but doesn't have a lot of short-term impact," he said Monday on CNBC's "Closing Bell." He pointed out that the Great Depression began over a trade war.
"It can really get ugly if people start competing with each other," Bobrinskoy said.
Last spring, citing the interest of national security, President Donald Trump launched the Section 232 investigation to determine the ramifications of steel and aluminum imports.
Then, earlier this month, the Commerce Department recommended imposing an approximately 25 percent tariff on foreign producers of steel and aluminum, saying in a report that the products were a threat to the economy.
Trump has said he supports the steel tariff.
But other nations could retaliate with tariffs of their own. The European Union is a major exporter of steel to the U.S. A German newspaper reported on Feb. 20 that the EU is planning to impose tariffs on classic American products, such as Kentucky bourbon, Harley-Davidson motorcycles and agricultural products such tomatoes and cheese. There is also fear that China will retaliate with similar tariffs over U.S. soybean imports.
While Bobrinskoy said the steel industry is a relatively small business, there are many companies that use steel in their products.
"If you add up all the [companies] who have steel in their products," he said, "including ... Boeing, it would be harder on us if you increase these prices."
Harley-Davidson media manager Michael Pflughoeft said until the company has a chance to confirm and review any proposed tariff increases, it will not respond to the potential impact on its customers.
"In general, tariffs impact our ability to offer products at a competitive retail price to our customers in any market," Pflughoeft said. "We support free and fair trade policies that address barriers to international growth and allow us to compete globally."
The Kentucky Distillers' Association, a trade group for bourbon makers, did not respond to a request for comment.
Bobrinskoy said the issue is "tough ... because politically you've got a lot of steel workers in swing states like Ohio and Pennsylvania. But then you've got car manufacturers in Ohio and Michigan."
"I'm a free trader; I think that net-net, it's better for the world if we don't have tariffs. But this is one where there are some core Trump constituents who really want to see less imports," he said.
American steel stocks climbed higher on Monday after news that Trump supports the tariffs.
— CNBC's Kayla Tausche contributed to this report.