The Truth About Steel Tariffs
In February 2018, President Donald Trump announced that 25-percent tariffs would be levied on all imported steel. The steel tariffs, as they are now known, have had a major effect on the prices of steel within the United States. In fact, prices for US-made steel have increased 41 percent since the steel import tariffs. Those price increases are good for steel manufacturers, but bad news for steel building buyers. If you’re in the market for a steel building, your building will simply cost more due to the steel tariffs.
The Truth About Steel Tariffs
American steel manufacturers increased their prices because they were no longer competing with cheap imported steel. In fact, import tariffs are designed to allow domestic producers to increase their prices. Trump like President Bush before him, imposed tariffs on foreign steel with the hope that American steel manufacturers would reinvest in their American operations. The reinvestment is supposed to create jobs as well as allow businesses to improve their infrastructure and equipment. President Bush’s steel tariffs did create more jobs, but at a higher price than expected. Most believe Bush’s tariffs were not successful because of the Great Recession, which began shortly after the Bush steel tariffs. It’s too early to tell whether the Trump tariffs will deliver similar results or fair better than his predecessor’s.
The most common misconception among consumers is that import tariffs on Chinese steel only raise prices for companies who use Chinese steel. For example, we at General Steel provide only 100% American-made buildings, but we received price increase memos from the metal building manufacturers we use within 15 minutes of President Trump’s announcement. The second most common misconception is that tariffs are the only factor in the price of domestic steel. With the tariffs dominating the news, we can understand why consumers would be lead to believe this but the fact is that there are a multitude of factors influencing the current price of steel.
Frequently Asked Questions About Steel Tariffs
Supply and demand in the steel market is the primary factor in the price of your steel building. The strength of the American Dollar, natural disasters and the size of your building will also affect its price.
Both the government who imposed the tariff and the domestic producers of the product stand to benefit. For example, in the case of the Chinese steel tariffs, the US government receives the revenue created by the 25% tariff and American manufacturers can also increase their prices by a similar margin.
Antidumping is one of many international trade rules outlined by the World Trade Organization (WTO). It’s important to understand the WTO does not enforce or regulate, it simply states how governments can and cannot react to dumping. A tariff is one such way a government can defend its domestic industry from a foreign country flooding its market with unreasonably low priced product.
In the case of the steel tariffs, China can bring its debate in front of the World Trade Organization if it feels that the tariffs are unfair. More commonly, the two countries involved in the trade war will negotiate or the tariffs will be relieved if the tax is not producing the desired results.
Prices on the Rise
The Trump Administration created a lot of buzz when it announced the tariffs in February. While economists rushed to forecast the impact of the tariffs, steel prices were already on the rise with prices spiking just 15 minutes after the announcement. We’ll take a look at a few of the factors involved in these price increases and how you can avoid the deceptive practices being used to make up for the differences in price.
Other Effects of the Steel Tariffs
When it comes to our steel buildings, the tariffs increased prices for materials delivered. For example, a 40×60 steel building before the implementation of the tariffs was almost always under $25,000. As the tariff value was passed down stream, those materials increased to around $30,000. Today, this 2,400 square foot building has increased in price again due to the volatility of steel prices.
While the tariffs are directly affecting the price of steel goods, they’re also affecting the business practices of companies that rely on steel for their products. In an effort to make up for the revenue lost to the higher price of steel, some steel building businesses are resorting to deceptive tactics to hook consumers.
What to Do
The implementation of the tariffs have left consumers between a rock and a hard place with prices and uncertainty rising. If you’re looking to buy a steel building, we recommend staying ahead of the inevitable price increases by completing construction of your building as soon as possible.
We also recommend working with the most reliable building suppliers. This ensures that you receive the highest quality building at the fairest price with clear communication throughout the process. General Steel has been the premier steel building business in the industry for over 20 years.