Final Thoughts
Final Thoughts
Written by John Packard
February 15, 2019
It’s time to start thinking (and planning) for what you, your family and your company are going to do should the United States and China fail to reach a trade agreement. The Trump administration has threatened to impose 25 percent tariffs on $250 billion worth of products produced by Chinese factories. So far, President Trump has followed through on his threats and promises, so we have to assume he will do so again this time. The media is beginning to report some of the potential fallout for American companies and probably even more importantly for the American consumer.
Right now, these products have a 10 percent tariff on them, and most of the companies have absorbed the tax and not passed it on to the customers. It will not be so easy to pass on a 25 percent tariff, which is essentially a tax on American companies that bring in material from China. This includes American-owned companies like that of my neighbor here in Florida who has a company making heating equipment used on the sidelines of most outdoor stadiums around the world. They currently are absorbing the 10 percent tariff, and they are betting the farm that the 25 percent tariffs will not be in effect when they need to replenish their inventories come June 2019.
There will be much written about the Section 301 tariff negotiations with the Chinese over the next two weeks. March 2 is staring us all in the face and we need to be aware of possible changes/ramifications of the new tariffs (taxes) on our lives. If you have something you would like to share with me (or our readers, or both) regarding how Section 301 will impact your company – good or bad – please send a note to: John@SteelMarketUpdate.com
I did contact a good trading friend of mine who lives in China. I asked for his take on two subjects: 1) The status of steel prices in China now that they are back from their New Year holiday (he told me prices went up $20-$40 per metric ton and then fell back; the only commodity holding its highs is iron ore due to the Vale mining disaster), 2) How the Chinese were handling the impending 25 percent tariff on Chinese products going to the United States. He told me, “On Chinese reaction and retaliation on potential March 2 tariff increases, it is still early (mid-Feb.), and anything is possible with the time given between now and March 1. Not till the fat lady sings, so to say….”
Next, something else you need to be aware of…. If your company filed an exclusion, my understanding is a new exclusion request will need to be filed on the one-year anniversary date of the exclusion process – even if you have not received a response yet on your initial filing. I am checking into this to make sure it is accurate and will provide more details (most likely from Lewis Leibowitz) once I know for sure how the process is supposed to work. Stay tuned.
Watch our website this week as we will be rolling out our agenda for the 2019 SMU Steel Summit Conference in Atlanta. There will be some gaps in the schedule, which we do on purpose either because we want to leave a space for a hot topic come late August or we are protecting a piece of the program as we iron out kinks, speakers, etc. We have some interesting plans in place and you will not want to miss this year’s conference. Our website is www.SteelMarketUpdate.com/events/steel-summit and if you would like to register now, you can do so by clicking on this link.
If you are interested in learning more about how to become a SMU subscriber (we call them “members”), or if you would like information about renewing your existing account, please contact Paige Mayhair at 724-720-1012 or by email at Paige@SteelMarketUpdate.com. I want to remind our members that we have new pricing, and for companies with lots of people both in North America and around the world we have some very competitive packages that will allow you to add unlimited numbers of people from your company. Ask Paige for details.
As always, your business is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John Packard
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