Last year, President Trump implemented “section 232” tariffs on steel and aluminum from all over the world. Even close allies like Canada were included. The law itself is meant to use tariffs as a way to maintain industries necessary for national security- in this case, steel and aluminum plants that may be needed to furnish war materiel if necessary.
President Trump was dissatisfied with the current status of the US metals industry and initiated an investigation that resulted in a recommendation that tariffs be implemented on all steel and aluminum imports. The tariffs have now been in effect for over a year, passing their first anniversary on March 23rd.
The steel industry in the US, which was heavily in favor of the tariffs, has had a very positive gain in the last year. The major steel producers uniformly saw increased profits across the board, much of which can be directly tied to the tariff impositions. Reductions on imports also are traceable to the tariffs, giving domestic steel producers a boost.
US Steel, now seeing increased profits, recently committed to investing over $1 billion in a Pittsburgh plant to implement new technologies for more sustainable and less polluting steel foundries for high-strength steel.
However, not all industries have benefited from these price increase. Construction firms have seen spiking costs across the board in the material they need to purchase as prices reflect the increase in duties. Steel used in construction rose in price across the board, costs which are eventually borne out as increased costs, reduced profits, and increased buying price for homeowners.
The auto industry has also seen a cut to its profits direct attributable to increased material costs. With tariffs of up to 25% on the biggest part of their manufacturing, it was inevitable that universally increasing costs would lead to smaller margins.
There is also an ongoing investigation into the potential to use 232 tariffs on car imports. This has met with considerable resistance from auto importers. This would put a premium of 25% on every car imported to the United States, an amount sure to frighten auto sellers in the face of a slowing car market.
The USMCA negotiations are threatened with derailment because of the tariffs as well. Lawmakers from Mexico, Canada, and even in the United States have all said that the continued imposition of 232 tariffs on Canada and Mexico could scuttle the entire deal. This has been a forceful point especially from Canadian representatives, as Canada’s metal industry is the largest source of steel and aluminum to the United States and supports tens of thousands of jobs.
As situations around tariffs change, we will continue to update you. If you have any questions on how this would affect your company, please contact our VP of Sales Andrew Galloway at agalloway@jmrodgers.com or 973-726-5340.
