5 Effects of Trumps Metal Tariffs

5 Effects of Metal Tariffs

In March last year, the Trump administration imposed new tariffs on aluminium and steel imports in an effort to boost domestic jobs in American metal production. The move has had a major impact on the steel and aluminium industries both in the United States and abroad, creating great opportunities for some American metal suppliers and sharply impacting operations of end product manufacturers. Here is a basic breakdown of the effects of the tariffs in the months following its implementation.

Effects of the US Metal Tariffs

1. Rise in Materials Prices

Both steel and aluminium prices have risen in the US as foreign supply of the materials entering the country has stalled. It’s not only the price of imported metals that have been affected, as the tariffs have allowed domestic metal suppliers to increase prices while still remaining competitive.

2. Consumer Cost Effects

In an effort to maintain profits, manufacturers making use of effected metals have passed on the price increases to consumers. Appliances and products which use steel and aluminium parts, including cars, have risen in price. Some products remain largely unaffected, as US Commerce Secretary Wilbur Ross demonstrated when downplaying the tariff’s negative effects. Appearing on CNBC, Wilbut used a soup can to say most Americans would barely notice the tariffs. The can contained 2.6 cents worth of steel, he said, adding, “if that goes up by 25%, that’s six-tenths of one cent.”

3. Domestic Metal Suppliers Effects

Because of mounting metal prices, domestic companies producing raw metals have widened their profit margins and increased share prices. Those with investments in steel and aluminium production have cause to celebrate the new tariffs. The news is not all good though with the manufacturing sector showing “a lot of momentum coming out of 2017 into 2018,” as stated by John Mothersole, an IHS Markit analyst in Washington. “But all that momentum has evaporated across the course of the year.”

4. Job Creation / Loss

The tariffs were designed to boost domestic metal production and ultimately create more jobs. Although aluminium and steelworkers laid off in the last 20 years expected to see some of these production jobs return, the tariffs have had the opposite effect by spurring layoffs and forcing manufacturers who buy the metal to rework supply chains in ways that undercut the use of American workers. Mid-Continent Steel and Wire Incorporated, a nails manufacturer, has said it’s cutting jobs to offset its added costs from the tariffs, while suppliers of steel racks for solar panels PanelClaw Incorporated and Nuance Energy say they’re now importing some racks from abroad rather than building them locally with American workers.

5. Imported Parts Attract More Buyers

Domestic manufacturers creating steel and aluminium products are at a disadvantage compared to foreign providers. As the cost of metal in the United States goes up, so does production costs for these products, making foreign options more attractive and competitive in price.

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