North America's largest steel tube CEO says tariffs are first step in revamping trade

Key Points
  • The Trump administration's exemptions on steel and aluminum tariffs are only the initial round in negotiations, says Zekelman Industries CEO Barry Zekelman.
  • "We think this is the first round of those type of negotiated solutions, which will probably be a combination of tariffs and quotas," he says.
  • Excluding countries like South Korea and Brazil from the tariffs will only result in China buying the products outside of the U.S. But he doesn't think the exemptions will happen "in whole."
Steel tariffs just the first round of a negotiated solution: Zekelman Industries CEO

President Donald Trump's steel and aluminum tariffs are only the first step in re-evaluating trade, said a steel industry CEO.

"We think this is the first round of those type of negotiated solutions, which will probably be a combination of tariffs and quotas," Barry Zekelman, executive chairman and chief executive officer of Zekelman Industries, told CNBC on Friday.

"We do need imports of steel, but we need them responsibly traded in here and at responsible volumes," Zekelman said on "Closing Bell." "We're looking to stem the quantum flow of imports into the country, so we can produce more steel and employ more people."

Trump signed an executive memorandum on Thursday, imposing tariffs on up to $60 billion in Chinese imports. The tariffs are intended to penalize China for trade practices that the Trump administration says involve stealing American companies' intellectual property. Earlier this month Trump signed an order imposing tariffs on steel and aluminum.

However, the U.S. has granted Canada, Mexico, Australia, the European Union, Argentina, Brazil and South Korea, a temporary exemption from the steel and aluminum tariffs.

Zekelman said excluding so many countries from the tariffs, in particular South Korea and Brazil, would be a mistake, because then China could simply purchase products by way of another country.

"I don't see that happening," he said. Instead Zekelman said he thinks how much each country will be exempted is up for negotiation.

Zekelman, whose company is the largest independent steel tube manufacturer in North America, with sales exceeding $2.7 billion each year, has been pro steel tariffs for some time. When news broke earlier this month about the tariffs, Zekelman Industries released a press release saying the company would hand out $1,000 bonuses to each employee after the tariffs were implemented, and each year after on the anniversary of the tariffs.

Last August, Barry Zekelman told CNBC: "The pipe and tube industry has been used as a conduit for foreign steel producers, primarily China, to circumvent duties and decimate our industry for many years. We are tired of playing 'whack-a-mole.' The future of our industry is at stake, we don't want handouts, just fair trade!"

A "realistic" solution, by way of negotiated tariffs, Zekelman said, would be good for not only the U.S. and American workers, but also for the European Union.

"That's what it's about: employee more people," he said.