04/10/2018
Both Domestic And Foreign Metal Tubing Prices Increase
Supply and demand dictate metal tubing prices. And there is no exemption for domestic steel prices which have already increased 10% since the announcement of Trump's tariffs. The reasons are simple. One reason is that there is a rush to maximize steel inventories of metal tubing and other raw metal products before further price increases. US steel mills have increased production making up for less foreign steel. But why are domestic steel producers increasing their prices as well? It's all about supply and demand. And primarily because they can. The loss of foreign competition has enabled United States steel mills to increase their prices.
Benefits To US Steel Costs US Manufacturers
As the price of steel and metal tubing prices rise, so will manufacturers' costs. Aluminum sheet prices have jumped 20-25% immediately after proposed tariffs were announced. Manufacturers have had to re-evaluate their supply chains. Fabricators who depend on a stable supply have found the volatility caused by the tariffs disturbing. Small and large employers have even been considering layoffs if prices continue to escalate.
"Prices are escalating on our raw products [including] tubing and plate steel, and that's due to volatility and the threat of tariffs," -- Jacob Uhlenkott, Advanced Welding and Steel.
U.S. Chamber Of Commerce Pleads No More Tariffs
It's not only steel tubing prices that have been affected. Over 40 groups have joined with U.S. Chamber Of Commerce urging President Trump not to add new sweeping tariffs specifically against China. Retaliatory tariffs on U.S. exports such as soybeans and grain could hurt the competitiveness of U.S. growers. China, one of the largest importer of American crops could just look elsewhere to buy those products. And, it's unlikely that they will quickly return even if tariffs were reduced in the future.
Volatility Is Bad For Bottom Line
There are unintended consequences to tariffs. Not only do tariffs increase metal tubing prices, though all the industries that use metal tubing will feel its effect. Metal is used not only to build heavy equipment, autos, and planes but is used in all almost every conceivable level of manufacturing. American jobs are at a real risk when the supply chain is disrupted. Businesses and markets do not like unpredictability.
"Tariffs make everybody freeze up," Nicole Sahin of Globalization Partners. "Our clients need to have [some degree of] predictability to build and expand their businesses globally, which includes pricing and sales decisions. Now, any company that relies on steel or related businesses is not as likely to hire salespeople abroad or try to capture new markets." -- Inc.
Declining Investment Worldwide
If the President's intentions were to decrease U.S. trade deficits, the outcome of his tariffs could have the reverse effect. International trade has increased since markets abroad have opened. Free trade has increased investments as domestic manufacturers increased their exports to markets that were previously too costly to sell to. Tariffs will undoubtedly result in lower investment abroad and much less enthusiasm to take risks.
