- Aug 20, 2000
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This appears to be an unnecessary lesson now about to be taught to American businesses and consumers: A globalized world exists whether economic illiterates reside in the White House or not. The WSJ reports that rather than paying more for U.S. good that require tariffed foreign materials, some consumers are opting to just buy the whole thing from foreign sources. Also, supply chains are in danger of moving outside of U.S. borders to allow products to be finished and then imported.
Wall Street Journal - Steel Tariffs Are Taxing Some American Companies
New tariffs intended to bolster the American steel and aluminum industries are starting to have the opposite effect in a key part of the U.S. supply chain.
U.S. steel producers are benefiting from tariffs that make it more expensive for companies to buy the metals overseas. But some U.S. firms that use the metals to make everything from refrigeration parts to wheels say the tariffs have led to higher materials prices that are forcing them to charge more for their products. These firms say that in some cases, customers are turning to foreign suppliers that use cheaper, tariff-free metals to make the same products they can then export to the U.S. without bumping up against the new trade barriers.
The fallout, while so far limited, illustrates how efforts to protect some U.S. companies can cause unintended pain for others.
“This is a nightmare for steel consumers,” said H.O. Woltz III, chief executive of Insteel Industries Inc., a North Carolina maker of concrete reinforcements. Mr. Woltz said some of Insteel’s customers have indicated they will boost imports.
...
Aneesa Muthana, owner of Pioneer Service Inc. in Addison, Ill., said her company recently lost two orders—worth about $60,000 annually—from a longtime customer.
Pioneer Service doubled the price of some refrigeration and climate-control parts to account for higher steel costs, she said. In response, the customer tapped a Chinese competitor to supply the parts. “This is really hurting manufacturing,” Ms. Muthana said.
One option for manufacturers with established supply chains abroad is to shift production outside the U.S. to take advantage of lower costs.
“A few of our customers have moved some of their production back to Europe and Canada because of the increases in prices for raw materials,” said Jerry Pines, chairman of Millenia Products Group, a fabricator based in Itasca, Ill. Mr. Pines said the effect of tariffs on pricing and availability “has made the marketplace the most difficult place to operate in the 50 years I have been in the steel business.”
Tool maker Stanley Black & Decker Inc. is considering replacing American suppliers with foreign ones for components of products made in the U.S.
“All options are open,” CEO Jim Loree said in an interview. “If that made sense in a given situation, there is a high probability we would pursue that.”
Lippert Components Inc., an Indiana maker of parts used to make RVs and boats, has begun importing some additional components made from steel and aluminum and is considering importing more.
“We’re finding alternative sources,” CEO Jason Lippert said. “There’s cheaper alternatives overseas.”
Jeffrey PizzoIa, chief operating officer of Ohio wheel maker Americana Development Inc., is among the manufacturers that have filed requests with the Trump administration to impose tariffs on finished goods imported from China. Attempts to pass on higher steel tariffs have helped push customers to take their business to Chinese suppliers, he said.
“We’re just asking the U.S. government to level the playing field,” Mr. PizzoIa said. “The tariffs are just pushing it perhaps to a breaking point for us.”
Other manufacturers’ customers are delaying orders.
“We have had several projects go from, ‘let’s roll’ to, ‘let us think about it,’” because of concerns about the availability and higher cost of raw materials, said Bill Assenmacher, chief executive of CAID Industries. Customers usually expect the Tucson, Ariz., industrial metal fabricator to start a job within two to four weeks, he said, but in today’s market, “we may have to go a couple of months to find material.”
...
New tariffs intended to bolster the American steel and aluminum industries are starting to have the opposite effect in a key part of the U.S. supply chain.
U.S. steel producers are benefiting from tariffs that make it more expensive for companies to buy the metals overseas. But some U.S. firms that use the metals to make everything from refrigeration parts to wheels say the tariffs have led to higher materials prices that are forcing them to charge more for their products. These firms say that in some cases, customers are turning to foreign suppliers that use cheaper, tariff-free metals to make the same products they can then export to the U.S. without bumping up against the new trade barriers.
The fallout, while so far limited, illustrates how efforts to protect some U.S. companies can cause unintended pain for others.
“This is a nightmare for steel consumers,” said H.O. Woltz III, chief executive of Insteel Industries Inc., a North Carolina maker of concrete reinforcements. Mr. Woltz said some of Insteel’s customers have indicated they will boost imports.
...
Aneesa Muthana, owner of Pioneer Service Inc. in Addison, Ill., said her company recently lost two orders—worth about $60,000 annually—from a longtime customer.
Pioneer Service doubled the price of some refrigeration and climate-control parts to account for higher steel costs, she said. In response, the customer tapped a Chinese competitor to supply the parts. “This is really hurting manufacturing,” Ms. Muthana said.
One option for manufacturers with established supply chains abroad is to shift production outside the U.S. to take advantage of lower costs.
“A few of our customers have moved some of their production back to Europe and Canada because of the increases in prices for raw materials,” said Jerry Pines, chairman of Millenia Products Group, a fabricator based in Itasca, Ill. Mr. Pines said the effect of tariffs on pricing and availability “has made the marketplace the most difficult place to operate in the 50 years I have been in the steel business.”
Tool maker Stanley Black & Decker Inc. is considering replacing American suppliers with foreign ones for components of products made in the U.S.
“All options are open,” CEO Jim Loree said in an interview. “If that made sense in a given situation, there is a high probability we would pursue that.”
Lippert Components Inc., an Indiana maker of parts used to make RVs and boats, has begun importing some additional components made from steel and aluminum and is considering importing more.
“We’re finding alternative sources,” CEO Jason Lippert said. “There’s cheaper alternatives overseas.”
Jeffrey PizzoIa, chief operating officer of Ohio wheel maker Americana Development Inc., is among the manufacturers that have filed requests with the Trump administration to impose tariffs on finished goods imported from China. Attempts to pass on higher steel tariffs have helped push customers to take their business to Chinese suppliers, he said.
“We’re just asking the U.S. government to level the playing field,” Mr. PizzoIa said. “The tariffs are just pushing it perhaps to a breaking point for us.”
Other manufacturers’ customers are delaying orders.
“We have had several projects go from, ‘let’s roll’ to, ‘let us think about it,’” because of concerns about the availability and higher cost of raw materials, said Bill Assenmacher, chief executive of CAID Industries. Customers usually expect the Tucson, Ariz., industrial metal fabricator to start a job within two to four weeks, he said, but in today’s market, “we may have to go a couple of months to find material.”
...
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