Tariffs could boost prices in Arizona
Punitive moves on steel and aluminum imports begin to squeeze supplies
President Donald Trump’s decision to impose tariffs on some imports of steel and aluminum has already squeezed supplies and boosted prices, and some Phoenix-area businesses worry that things could get worse before they get better.
“It looks like steel might skyrocket and get hard to source (or obtain), with longer lead times,” said Greg Hankerson, co-owner of Vintage Industrial, a Phoenix company that makes custom steel furniture.
“I wouldn’t be surprised if people start stealing steel off the sides of buildings.”
Doug Cone, co-owner of distributor Arizona Metals in Mesa, said supplies have tightened for products such as flatrolled steel that’s used in automobiles, appliances and other big-ticket items.
“I expect (businesses) to pull the plug on some projects over the summer,” he said, citing construction delays or cancellations as a possibility.
Citing national security concerns, Trump in early March made good on a vow to impose tariffs of 25 percent on steel and 10 percent on aluminum entering the country.
The president later backtracked a bit, giving exemptions for steel from Canada, Mexico and other countries. The tariff decision has largely boiled down to a dispute with China, with both nationsthreatening to slap more tariffs on the other’s exports.
One standard type of steel, hot rolled coils, has jumped from $590 a ton in October to near $860 today, according to futures prices on the Chicago Mercantile Exchange.
The same category of steel sold for about $360 a ton in December 2015. With a smaller tariff, aluminum prices haven’t changed as muchbut have risen a bit recently.
The tariffs elicited sharp criticism outside the steel and aluminum industries, especially from groups representing manufacturers and businesses generally.
Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry, called Trump’s policies “economic madness.”
“The president’s announcement that he’ll impose a 25-percent tariff on steel and a 10-percent tariff on aluminum fails Economics 101,” Hamer said in a prepared statement shortly after the tariffs were announced.
He accused Trump of “making life more expensive for hardworking American families” while “harming American manufacturers by making products stamped ‘Made in the USA’ less competitive overseas.”
Tariffs are “likely to create new challenges in the form of significant added costs for manufacturers and American consumers,” said the National Association of Manufacturers in a statement.
“Tariffs also run the risk of provoking China to take further destructive actions against American manufacturing workers.”
Trump’s tariff announcements were a catalyst for the recent stock-market slide, though prices have recovered a bit. The broadest measure of the market, the Wilshire 5000 Total Market Index, as of April 13 was down about 7 percent or $2.4 trillion from its March peak.
Conversely, the pro-tariffs Coalition for a Prosperous America predicts that the consequences will be “nearly undetectable, with the net job impact approaching zero” and virtually no change to the nation’s gross domestic product.
The group claims to represent a political cross section of Americans and includes current or former union, agricultural and steel-company executives as directors. It projects a net gain of 19,000 jobs in the steel and aluminum industries.
Michael Stumo, the coalition’s chief executive officer, in a prepared statement said anxiety over cost increases is “overblown.” He has called for even more protection from foreign competition.
The Aluminum Association said it supports tariffs aimed at China but also said it was pleased the White House excluded NAFTA trading partners Canada and Mexico. Other nations including Australia, South Korea, Brazil and producers in the European Union were later exempted.