We Are Preparing for Tariffs

As you know, on Monday, February 10th, President Trump announced sweeping tariffs on foreign steel and aluminum products, re-enacting a strategy from his first term that pleased domestic steel producers. The president signed two executive orders that would impose a true 25% tariff on steel and aluminum from all countries without exclusions, quotas, or exemptions. The tariffs also extend to key downstream products, terminating all generally approved exclusions.

Here are some key highlights from the White House Fact Sheet.

• President Trump is taking action to protect America’s critical steel and aluminum industries, which have been harmed by unfair trade practices and global excess capacity.
• Key reforms include eliminating all alternative agreements, applying strict “melted and poured” standards, expanding tariffs to include key downstream products, terminating all general approved exclusions, and cracking down on tariff misclassification and duty evasion schemes.
• By granting exemptions to certain countries, the United States inadvertently created loopholes that were exploited by China and others with excess steel and aluminum capacity, undermining the purpose of these exemptions.
• This statute provides the President with the authority to adjust imports being brought into the United States in quantities or under circumstances that threaten to impair national security.

What does this mean for you as a customer of Cleveland Steel?  
The fact that the vast majority of the steel we buy today is either produced domestically or already has a tariff included in our landed cost is good news.  The remaining steel we buy comes from our neighbor up north, Canada, and most likely will be subject to the 25% tariff.  We are still sorting out the impact from all of our suppliers (not just steel) to determine the true impact and evaluating inventories to determine when and if a tariff will be passed along.

We are confident that our steel supply will not be interrupted, as we have annual contracts with most of our steel suppliers. Currently, we have plenty of steel at our plants, in the mills, and in outside warehouses.

As we have seen in the past, decreased imported steel results in higher domestic demand, resulting in increased lead-times and higher prices from domestic steel producers.  We expect that may happen again.

What you can expect from us.    
We will continue to monitor the ever-changing tariff regulations and provide timely and accurate updates on how they will impact the steel pail products you buy from us. I highly recommend subscribing to Steel Market Update for the latest on steel pricing and industry news.