The heavy price of metal tariffs the weekly standard west la college business office

Glenn sherrill’s company buys steel. Tons and tons of steel. So much steel that his grandfather put the word in the company’s name when he started it. In the last 60 years, family-owned steelfab has grown from a small maker of ornamental handrails in charlotte, N.C., to a large metal fabricator. It buys steel from U.S. Mills, cuts or welds it, and then ships it to big construction companies. It has seven plants, in places as far-flung as texas and virginia, and about 1,000 employees.

Sherrill worries the steel tariffs announced by the trump administration will be a big blow to his company and to the construction industry in general.

Glenn sherrill’s company buys steel. Tons and tons of steel.

So much steel that his grandfather put the word in the company’s name when he started it.Buys steel in the last 60 years, family-owned steelfab has grown from a small maker of ornamental handrails in charlotte, N.C., to a large metal fabricator. It buys steel from U.S. Mills, cuts or welds it, and then ships it to big construction companies. It has seven plants, in places as far-flung as texas and virginia, and about 1,000 employees.

Sherrill worries the steel tariffs announced by the trump administration will be a big blow to his company and to the construction industry in general. Steel prices have been going up, and sherrill’s suppliers have indicated that the tariffs will enable them to raise prices further. In the short term, steelfab will be unable to pass the rising costs along to its customers because of contracts guaranteeing a price. In the longer term, though, its products will cost more, and this might dissuade contractors from building or cause them to switch to steel alternatives like concrete.Buys steel

“the tariffs are really bad for us,” he says. “the fear is that steel prices continue to rise and then they increase the overall building cost to a point where developers say, ‘let’s just stop. It no longer makes sense to build this building. We’re just going to put it on hold.’ ”

The tariffs announced by donald trump this month—25 percent on steel, 10 percent on aluminum—will have wide-ranging effects. The benefits and costs are already starting to ripple throughout the global economy. Our allies are scrambling to cut deals to avoid the levies. Other countries are weighing countermeasures while economists fret about a trade war. U.S. Steel producers are ramping up production and hiring more workers. U.S. Consumers are facing higher prices for goods with metal in them, from cars to cans of beer.Tariffs announced those feeling the most immediate effects, though, are the companies that buy steel and aluminum.

The new government tax will make foreign metals more expensive, and U.S. Steel companies will no longer have to worry about being undercut on price by foreign rivals. Among the largest consumers of steel and aluminum in the united states are metal fabrication companies like steelfab. They buy raw material from large U.S. Steelmakers such as nucor, U.S. Steel, and steel dynamics and do a wide range of things to it. They punch holes in it, cut it, bend it, shape it, or weld it to something else. Then they send it on to a construction site or to other manufacturers, who make everything from agricultural equipment to railcars to exercise machines.

Unlike steel mills, which are large enterprises, metal fabrication shops tend to be smaller, family-owned businesses, typically with a few dozen to a few hundred employees.Announced trump many can be found in trump-friendly, manufacturing-heavy states in the midwest and south. According to government figures, nearly 1.5 million people were employed in the metal fabrication industry in february. In contrast, just 383,000 worked in metal manufacturing.

In imposing the tariffs, trump said that steel imports “threaten to impair the national security of the united states” by weakening the domestic steel industry, which could make the pentagon reliant on foreign-made steel. The administration also cited an economic rationale to justify the tariffs. Commerce secretary wilbur ross said the tariffs were another example of trump “standing up for american families, american businesses, and american workers.”

There’s little doubt that the tariffs will help steel companies and steelworkers.Announced trump steel-company stocks and steel prices are trending upward. U.S. Steel said this month that it might restart part of a plant in granite city, ill., which could lead to jobs for 500 workers. Nucor announced a new mill in florida that will employ 250 people.

Yet those gains come at a cost. A study by the trade partnership, a washington economic consulting company, found that while the tariffs would increase employment in the metals industry by about 33,000 jobs, they would cost about 179,000 jobs in the rest of the economy. The biggest loser in the manufacturing sector would be fabricated metals.

Administration officials have been mostly dismissive of concerns about the negative effects of the tariffs. On CNBC, ross held up cans of beer and campbell’s soup as props and explained that the cost of metal in each can would go up only a fraction of a cent.Tariffs announced he concluded that “all this hysteria is a lot to do about nothing.” asked about the effect on metal-using industries, white house trade adviser peter navarro told fox news, “look, they don’t like this. Of course they don’t like this. But what do they do? They spin, the fake news. They put all this hyperbole out.” steelworkers have been even more blunt. Asked what he would say to other manufacturers worried about layoffs and plant closings, dan simmons, head of the united steelworkers local in granite city, told NPR: “you know what I say to them? They had no problem taking jobs away from us under that same pretense. So to hell with them.”

Metal-fabrication companies like steelfab, though, insist that their worries are real. Business for their industry has been strong because the economy is doing well, including the manufacturing and construction sectors that they principally serve.Announced trump prices from their suppliers fluctuate all the time, but the difference with the tariffs is that prices promise to rise more sharply and more quickly than usual.

At captiveaire systems of raleigh, N.C., president bob luddy says his company might be more immune to the tariffs initially than smaller companies, because it has many of its steel prices locked in for the next 6 to 12 months. CaptiveAire makes kitchen-ventilation equipment for restaurants using steel from both U.S. And european producers. It has six U.S. Plants and 1,200 employees.

In the short term, captiveaire will be able to avoid passing higher costs along to its customers, though the tariffs will cut into the company’s profits. If tariffs remain in place for a year or more, luddy will probably have to raise prices, which could discourage companies from opening restaurants.Buys steel “it’s a tax on the company is what it is, in simple terms,” he says. “somehow, that seems to get overlooked.”

One of the industry’s leading trade groups, the fabricators & manufacturers association, met in scottsdale, ariz., earlier this month, and tariffs dominated the discussions, says ed youdell, the association’s president. The big concern is that if metal parts suddenly cost more to produce in the united states, the manufacturing and construction industries might turn to foreign suppliers. During a panel discussion at the conference, a buyer for briggs & stratton, an engine-maker based in wauwatosa, wisc., was asked if rising prices for parts would prompt him to turn to foreign suppliers. His response: “I will do my job.” tariffs designed to help american industry could actually help foreign steelmakers and damage U.S.Tariffs announced metal fabricators.

This month, the industry trade journal the fabricator invited readers to sound off anonymously on the tariffs, and the results were overwhelmingly negative: “it has the potential to destroy american business and mine entirely. . . . I see manufacturing going down and machine sales with it,” wrote “PM,” a small machine manufacturer in nevada. “steel going from 43 cents per pound this quarter to 65 cents next quarter? . . . How is this going to help our economy? This could cause a snowball effect with our economy going off a cliff,” wrote “RS,” who runs a 100-employee fabrication shop.

Youdell says metal fabricators are waiting to see how the tariffs shake out, and if there’s more coming from washington: “are they going to extend those tariffs down the supply chain?Announced trump that’s our hope. Actually, we’d prefer not to have tariffs. We’d prefer open and free markets. But this is the world we live in.”

At steelfab, sherrill is preparing to weather the expected increases as best he can. Like other steel users, he doesn’t know precisely how quickly or how sharply his costs will rise.

A week after the tariffs were announced, sherrill wrote a letter to his customers. He told them his steel costs have risen between 25 percent and 45 percent in recent months and that more increases are probably on the way. His letter concluded: “we have no way of knowing the additional impact the tariffs will ultimately have on prices and lead times but hope that a lot of the escalation is already baked into the current price. . . . We appreciate your business and will do our best to mitigate the impact of the tariffs by continuing to communicate to you as soon as we have information from our steel suppliers.”

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The weekly standard http://assets.Weeklystandard.Com.S3.Amazonaws.Com/tws15/images/logo-large.Png the weekly standard 2018 washington, DC politics 2018-03-16 march 26, 2018 http://www.Weeklystandard.Com/the-heavy-price-of-metal-tariffs/article/2011963 2018-03-16T02:40 2018-03-16T02:10 the heavy price of metal tariffs glenn sherrill’s company buys steel. Tons and tons of steel. So much steel that his grandfather put the word in the company’s name when he started it. In the last 60 years, family-owned steelfab has grown from a small maker of ornamental handrails in charlotte, N.C., to a large metal fabricator. It buys steel from U.S. Mills, cuts or welds it, and then ships it to big construction companies. It has seven plants, in places as far-flung as texas and virginia, and about 1,000 employees.Buys steel

Sherrill worries the steel tariffs announced by the trump administration will be a big blow to his company and to the construction industry in general. Steel prices have been going up, and sherrill’s suppliers have indicated that the tariffs will enable them to raise prices further. In the short term, steelfab will be unable to pass the rising costs along to its customers because of contracts guaranteeing a price. In the longer term, though, its products will cost more, and this might dissuade contractors from building or cause them to switch to steel alternatives like concrete.

Charlotte, jobs, trump, tony mecia, tariffs, economic growth, steel, aluminum tariff http://cdn.Weeklystandard.Biz/cache/280×280-34d7693359fc38a7bf705fa8da0a5e62.Jpg