Proposed Steel & Aluminum Tariffs Bolster Domestic Metals Sourcing

February 27, 2018


Hello again. In this week’s Thomas Index we’re going to take a look at sourcing activity for steel and aluminum in the Thomas Network at Thomasnet.com, and how that activity may be influenced by proposed tariffs by the Trump administration.

This past week, the Commerce Department Secretary Wilbur Ross recommended steep tariffs on foreign steel and aluminum – specifically, 24 percent on steel, and 7.7 percent on aluminum. The stated goal is to boost U.S. output to at least 80 percent of capacity by cutting steel imports by 13.3 million metric tons, and aluminum imports by 669,000 tons. This announcement set Wall Street into high gear, boosting the stock price for major U.S. steel and aluminum producers such as Nucor, U.S. Steel, AK Steel, Alcoa, Arconic, and Reliance Steel & Aluminum.

While the specifics of the plan were just recently made public, it’s been clear that the administration has been strongly considering some type of tariffs for quite some time. We covered this in regard to steel in a Thomas Index back in June of 2017. Check out the new Insights section at Thomasnet.com to see that report.

The anticipation of expected tariffs could explain why we’ve been seeing increased activity in sourcing for both steel and aluminum from North American suppliers at Thomasnet.com. In fact, our data shows that sourcing for steel is up 46 percent month-over-month in our network; sourcing for steel pipe is up 48 percent, and sourcing for aluminum sheets is up 40 percent month-over-month. This activity could be attributed to manufacturers lining up U.S. suppliers before the cost of metals from overseas suppliers soars as a result of the pending tariffs. While the President has until mid-April to decide on what action his administration will ultimately take, it will be interesting to keep an eye on sourcing activity for these metals as that decision date approaches, and as negotiations play out.

Specific to aluminum, it will also be interesting to see how predicted shortages will impact sourcing activity for that metal. Some analysts forecast a global aluminum deficit of 361,000 tons in 2018, due to a number of factors — not the least of which is China finally taking steps to crack down on their country’s massive pollution problem — including the closure and temporary shutdown of legal and illegal smelters.

Well, that’s what we’re seeing this week. If you’re interested in a free custom report showing you which buyers are in-market today for the products and services you offer, visit Thomasnet.com/BuyerReport.

Thanks for watching.

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  • Mark Sanguinetti
    Congress has the authority or power to regulate commerce with foreign nations along with commerce between U.S. states. Commerce is the activity of buying and selling, especially on a large scale. The word commerce has the same basic meaning as the word trade, except at a larger scale. The constitutional role of the U.S. congress involves the regulation of U.S. trade with foreign nations, the U.S. states and the Indian Tribes. This should not be outsourced to foreign tribunals. Any feedback to congress from companies could primarily be from those companies who produce goods in the U.S. or at least are considering plans to set up factories and plants in the U.S. thereby creating real wealth as a society and nation. With U.S. factories and competition between U.S. companies in the production of certain product types, tariff taxes can then be placed on these product types when competing with foreign imported goods. Also the amount of tariff tax can vary by product type and nation, with specific product types having a higher tariff tax than other product types. When the U.S. last had a trade surplus, 1975, this was how our tariff tax system was operated. As an example, a product with no U.S. factories and production can have the lowest tariff tax. A product type with competing U.S. factories can have the highest import tariff tax rate. The amount of tariff tax can also vary by country with a nation like Canada getting lower tariff taxes than other nations, for example, China.

    Since we have U.S. manufacturing companies and specifically their employees taxed through income taxes, which did not begin as part of the U.S. Constitution, amendment 16, until 1913, we should also have U.S. taxes on imported goods referred to in the U.S. constitution as Duties and Imposts. Obviously, the U.S. should at least have a level playing field of taxation. Namely, if our U.S. productive workers are required to pay an income tax, then there should also be a tax on imported goods. Otherwise one of the primary reasons that U.S. companies will offshore production to foreign nations is to lower taxes. Even with the rise of wages overseas for their productive workers compared to the U.S. workers, companies will often still offshore production to foreign nations and companies to avoid U.S. taxes.