SMU Data and Models

SMU Market Trends: Will Trump's Tariff Help Your Business?

Written by Tim Triplett


Only one out of four respondents to Steel Market Update’s market trends questionnaire this week feel President Trump’s 25 percent tariff on steel imports will have a beneficial effect on their businesses. Most (62 percent) expect it to hurt business in the long term, while the remaining 13 percent predict it will have little effect on their companies either way.

Many respondents expect the benefits of the tariffs to be short-lived:

• “Higher prices, even selling to our contractors at the same margins, will generate more gross profit dollars per ton.” Service Center/Wholesaler

• “We will make more money over the short and medium terms. Then we will all get killed when this thing falls apart.” Trading Company

• “It will help in the short term but may be shortsighted. I still have 15 years left in this business, so I hope we haven’t made our domestic manufacturing less competitive globally.” Service Center/Wholesaler

Others expressed distress over the potential impact of the tariffs on the steel trade and U.S. manufacturing:

• “What the mills have done with steel prices is borderline criminal.” Service Center/Wholesaler

• “The domestic mills continue their tradition of irresponsibility, running up prices at a reckless pace. It’s like a gambler trying to “make it all back on the next hand.” Service Center/Wholesaler

• “The tariff allows domestics to jump their prices way up with little option for consumers.” Service Center/Wholesaler

• “It is reducing the number of people that can offer us steel at a competitive price.” Service Center/Wholesaler

• “We will be at a significant pricing disadvantage to our competitors who are importing competing products using material from lower-cost regions.” Manufacturer/OEM

• “Like Barack Obama was to guns, Donald Trump is becoming America’s greatest steel salesman. I just worry about the long-term effects the tariffs will have on curbing future manufacturing-related business.” Service Center/Wholesaler

• “Ultimately, higher prices will come down and tariffs that artificially increase costs will slow future demand.” Trading Company

• “Whether price increases due to tariffs or otherwise are good or bad is never the issue. People and businesses can adjust. What hurts is the sudden through-the-roof price increases that are unfairly manipulated. American manufacturing cannot adjust this quickly.” Service Center/Wholesaler

• “It’s both good and bad. Near term, margins will be great. Longer term, it will get back to normal with the potential loss of end users, challenging capital and credit requirements, and huge downside risk if and when markets adjust. Lastly, there’s probable consolidation at the mill/converter and service center levels.” Service Center/Wholesaler

• “We still have to honor the sale prices we quoted based on foreign supply and, of course, our budgeted margins are not 25 percent.” Service Center/Wholesaler

• “Being a Canadian manufacturer, the U.S. tariffs will likely result in lower steel costs and shorter lead times in Canada, which will make our products more competitive, especially in North America. North American mills would not be able to raise prices if there was foreign competition to make them compete fairly.” Manufacturer/OEM

• “If you have yearly contracts, you are going to be in a world of hurt. However, I think most people anticipated the tariffs coming for a long time and bought heavy in the first quarter.” Service Center/Wholesaler

• “With imports of finished goods that are not getting the tariff, this ultimately could cost us 30-40 percent of our sales!” Manufacturer/OEM

• “The effect on us is yet to be determined, based on outcome of an exception request.” Steel Mill

• “Our domestic relationships are invaluable at a time like this.” Service Center/Wholesaler

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The latest SMU market survey results are now available on our website to all premium members. After logging in at steelmarketupdate.com, visit the pricing and analysis tab and look under the “survey results” section for “latest survey results.” Historical survey results are also available under that selection. If you need help accessing the survey results, or if your company would like to have your voice heard in our future surveys, contact info@steelmarketupdate.com.