SMU Data and Models

SMU Market Trends: Will Tariffs Impact Your Business?

June 7, 2018

The market was shocked when President Trump revoked the exclusions and implemented tariffs on steel and aluminum imports from the United States’ closest trading partners Canada, Mexico and the EU. In this week’s canvass of the market, Steel Market Update asked industry executives if they expect any direct impact on their businesses as a result.

Nearly 9 percent feel the decision will have no impact on their operations. Another 28 percent are convinced, or at least hopeful, that the Trump administration will reinstate the exclusions before any real damage is done. The majority, about 59 percent of those responding to SMU’s questionnaire, expect the tariffs on imports to tighten up steel supplies and cause prices to rise even further, which could potentially have both positive and negative effects on a given company. About 4 percent fear the trade restrictions will cause a shortage of steel by the end of the year.

The tariffs are viewed negatively by many, depending on their position in the market:

“It’s a blood bath.” Trading Company
“We buy from two Canadian mills, so the impact is already felt.” Service Center/Wholesaler
“It affects everything: supply, demand, global pricing and the shipping of finished HVAC goods into the USA.” Canadian Manufacturer/OEM
“These NAFTA-related tariffs are an untimely and uncalled for tax on U.S. manufacturers. It is coming straight out of our hides and we will not be able to collect any more from our customer base.” Manufacturer/OEM
“It increases our costs, reduces margins, and our customers will source foreign for our products if the tariffs are not reversed.” Manufacturer/OEM
“We’re most concerned about the impact of retaliatory tariffs on our customers that are doing business using U.S.-produced steel in Mexico and Canada.” Service Center/Wholesaler
“If the administration reinstates the exclusions, I see fourth-quarter prices relatively flat.” Service Center/Wholesaler