Tariffs’ bite
New Mexico businesses in line of fire
Stanco Metal Products President Jerry Slagel says base steel prices have jumped more than 40 percent since President Donald Trump’s administration announced in March that it would slap tariffs on steel and aluminum imports.
Slagel’s company stamps, coats and assembles massive rolls of steel into parts for appliance and home-furnishing manufacturers at a 160,000-square-foot factory at Santa Teresa in southern New Mexico. It exports about 80 percent of those parts to Mexican “maquila” factories, and about 20 percent to U.S. producers.
“We get the steel in huge rolls of like 20,000 pounds and feed it into metal presses to punch out metal parts,” Slagel said. “The base price index for hot rolled steel went from about 30 cents before the tariffs took effect to about 43 cents a pound in April.”
Stanco and other metalworking companies at the Santa Teresa industrial parks are facing a similar situation, raising concern about the ability of local firms to remain competitive with suppliers from other countries seeking to gain ground in the Mexican market,
said Jerry Pacheco, executive director of the International Business Accelerator.
“Santa Teresa is a major manufacturing base, particularly in metal parts for autos and appliances like dishwashers and dryers,” Pacheco said. “Trump’s tariffs and trade threats sent a ripple through our operations here because it’s very disruptive to the supply chains of companies that deal with metals.”
Apart from Stanco, that includes Mallory Metal Products Inc., Erickson Metals Corp., and Southwest Steel Coil Inc., which together employ about 350 workers at facilities in Santa Teresa. Only Slagel could be reached for comment by the Journal, but all the companies are dealing with the impact of the tariffs, Pacheco said.
“If our companies have to raise their prices because of higher steel costs, they could lose Mexican customers to other suppliers who aren’t facing U.S. tariffs and can supply metal parts a lot cheaper,” he said. “It’s putting our companies at a real disadvantage.”
Some Santa Teresa firms are scrambling to find alternative sources of metal in Asia and other places, but that’s not easy, Pacheco said.
“You can’t just switch from one supplier to another overnight,” he said.
Although the administration has temporarily extended tariff exemptions to some countries, companies say they’re nonetheless already feeling the effects.
In Stanco’s case, it’s U.S. manufacturers who raised wholesale prices, because the company acquires all its steel from domestic mills.
“It’s U.S. steel producers who are taking advantage of the situation to match import prices,” Slagel said. “And we have to pass those costs on to our customers, which is difficult to explain to our buyers.”
Ultimately, price hikes for metal and aluminum parts will translate into higher prices for consumer goods, which could cut demand over time, Pacheco said.
“As it filters down through the supply chain, consumers are the ones who will end up paying for the tariffs out of their pockets through higher prices,” Pacheco said. “If demand falls, it’s our metal fabrication workers who will be hurt. Those are goodpaying jobs with benefits that ripple through the local economy because the workers spend their wages here.”