What the Steel Tariffs Mean for U.S. Metal Forming Businesses

In recent weeks, the United States implemented new tariffs on steel and aluminum to promote a policy of “America First.” The theory is that increasing import taxes on foreign steel and aluminum encourages U.S. companies to use U.S.-supplied steel and aluminum boosting production capacity toward a goal of 80% capacity utilization.   Increased usage of American steel should drive more jobs for US steel and aluminum manufacturers and less business for competing suppliers in other markets, such as Europe and China.

What the Tariffs Mean for U.S. Industry and Consumers

While these steel tariffs were put in place to put American suppliers at an advantage, many drawbacks are now occurring that are affecting manufacturers and consumers alike.  The Coalition of American Metal Manufacturers and Users has said that companies that make products using steel and aluminum employ more than 6.5 million workers across the country compared to 80,000 workers at steel plants.  Any company that uses the materials will be faced with higher production costs. A report published in June shows that US steel is at the highest point in 16 years at $982 per ton and the widest price differential compared to $644 in Western Europe and $566 in China.

When manufacturers face increased steel costs, they must offset the added expenses incurred in other ways, which has the following effects:

  1. U.S. consumers will pay an increased cost for products containing steel, such as cars and appliances.
  1. U.S. manufacturers cannot pass on the increased cost to their customers. Higher tariffs lead to smaller profits, unless manufacturers are able to obtain steel from domestic suppliers at pre-tariff costs.
  1. With domestic steel at a premium, American steel suppliers may continue to increase their prices, though they will likely keep it just below the combined cost of foreign steel and its tariffs.

In typical supply-and-demand fashion, the limited supply of steel within the U.S. has already caused the price to go up. Since April of 2018, the price of steel has increased almost 26%.

This makes U.S. manufacturers that rely on steel far less competitive, and leaves some worrying for the future of their businesses. Rather than face intense profit losses on U.S. soil due to the increased material costs, some manufacturers are already outsourcing some operations to China instead, where they can use cheap Chinese steel tariff-free.

Learn More

The effects of the new U.S. steel tariffs are widespread, touching aspects of the entire economy. But nothing has been more impacted by it than the manufacturing sector. Even if the results from the tariffs are good for domestic suppliers of steel, many other businesses that use the steel are feeling the pressure as they are negatively affected by the rising prices.

As a U.S.-based metal stamping company and a metal forming leader, Pentaflex continues to be on alert and up-to-date with information regarding this rapidly changing situation.

For more information about the recent tariffs, or to learn about our products and services, please contact us.

Forming Our Future – Things to Look Forward to in Metalforming

Forming Our Future

This past spring, Pentaflex took part in the latest installment of Forming Our Future: Leadership Conference and the PMA Annual Meeting from March 7-10. This is a major event not only for our industry, but for Pentaflex in particular. In addition to our sponsorship of the event, our President, Dave Arndt took a lead role as Chairman of the Board for PMA.

The event brought together metalforming executives and offered a chance to explore emerging trends and learn new skills. Topics such as the skills gap, government regulations, and managing changing the marketplace were all discussed. Conferences such as this allow companies to share what has worked for them, while learning about new techniques and opportunities to help their businesses thrive and grow.

Automotive Parts Suppliers Conference

The following month, Pentaflex hit the road again to take part in the 25th Annual Automotive Parts Suppliers Conference from April 25-26, 2018.

The event featured educational sessions, networking opportunities, and discussions related to the current outlook for the automotive industry. Attendees learned about new advancements in this sector and how they can apply these trends to their businesses.

Because this was a milestone 25th anniversary for the event, there was an additional networking cocktail reception, hosted at the Detroit Athletic Club.

Pentaflex President and PMA Chairman Dave Arndt delivered Welcoming Remarks, and leaders from manufacturing shops and well-known publications discussed issues such as NAFTA updates, lightweighting trends, modern quality control methods, and more.

Why the Events Are Vital to Our Industry

Taking part in industry events benefits companies in a number of ways; first and foremost, they help business leaders stay informed. There are so many advancements coming out every year that it would be near impossible to keep track of everything while continuing to run your business as usual. These events bring together subject matter experts who can discuss current trends and provide helpful insights. They also encourage networking with peers to build connections that may grow your business down the road.

Pentaflex is committed to helping companies in the automotive sector stay competitive in the changing supply landscape. Be sure to look for us at the next PMA event, or reach out directly for more information.