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Raw Material Prices Surge As US Steel And Aluminium Tariffs Forced Suppliers To Cry
Nov 05, 2018

Months after the hammer came down on U.S. imports of steel-aluminum, the key raw material for cars, manufacturers and parts suppliers are struggling.Representatives of the us auto and parts industry "bitterly complained" about the trump administration's tariffs during a hearing before the senate finance committee this week.At the same time, they are calling on the government to put down its tariff hammer and pursue sensible ways to resolve trade disputes with other economies.

"U.S. steel costs the highest in the world"

"tariffs have a certain positive impact on jobs in the steel industry, but overall it is a huge loss.Everyone else suffered." Laura bowman, President of Trade Partnership, a Washington consulting firm, said the firm's research shows that for every additional job created in the steel and aluminum industries, there are 18 fewer jobs in other industries, such as cars, parts, and metal products.

On March 8, trump announced tariffs of 25 percent and 10 percent on imported steel and aluminum products, respectively, and the tariff measure officially went into effect on March 23.The European Union, Canada and Mexico were exempt for a time, but the United States decided to impose tariffs on steel-aluminum products from June 1 in the three economies.

The tariffs have allowed domestic producers to raise steel prices and profits.The price of domestic hot-rolled strip steel in the us rose 28 per cent as tariffs were imposed on imports, according to SteelBenchmarker.Among them, tariffs pushed the price of hot-rolled strip steel to around $1,000 per metric ton between June and July.In July, commerce secretary Ross acknowledged at a senate finance committee hearing that steel prices in the U.S. market have risen much more than the reasonable price 

range that the trump administration's 25% tariff would imply.

As prices of raw materials such as steel and aluminum rise, production costs rise and U.S. parts makers become less competitive, some companies may choose to move factories out of the country and import finished products.Something similar happened in 2002, when then-president George w. bush announced tariffs on steel.Christine dreik, vice President of industry, labor and economics at the center for automotive research in the United States, noted that rising U.S. steel and aluminum prices have hit component suppliers hard.

Supplier requests "given time"

"the situation of tight supply will not change soon.Tariffs reduce the amount of imported steel on the market, and many domestic steel mills are running close to full capacity, adding additional steel processing facilities will take time." Said Chris bilman, manager of Majestic market research.

Recently, in the American car and equipment manufacturers association (MEMA), in a meeting of the organization in Ohio Shiloh industrial metal parts manufacturers, chief executive of ramsay Hector kameez, said: "to customs cost burden, and technology to develop and implement local production, if not impossible, is also very difficult.We need some time to redefine our supply chain."

Hermitz also called on trump to offer tariff exemptions on steel and aluminum in Canada and Mexico, as both countries tentatively agreed to a new free trade agreement.At the end of September, the United States, Mexico and Canada agreed to renew the north American free trade agreement (nafta), a new trade agreement known as the u.s.-mexico-canada agreement (USMCA).The new agreement will come into force three years after approval.Hermitz believes the government should give companies a similar transition period to secure domestic supplies of steel and aluminum.

In the United States, many vehicle manufacturers and suppliers purchase steel and aluminum materials from the United States, but some special steel products can only come from overseas or the United States domestic limited supply.Changing that would require material engineers from vehicle manufacturers and component suppliers to work with integrated mills to develop imported alloys of equal quality and then test and verify them to ensure that they meet technical specifications, all of which take time.