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SSC Laser
4th June 2018

SSC Laser Cutting: Our View on Steel Import Tariffs

One of Donald Trump’s big 2016 election campaign themes was that American jobs were being lost because of unfair global trade, especially in the steel industry. When he threatened to introduce tariffs on Chinese goods and to pull the US out of trade deals most experts thought it was typical Trump bravado.

On Friday, The President has kept one of his election campaign pledges and not since the 1930’s has the world been so close to a full-scale trade war.

If this situation escalates, the consequences could be dire. If the US and EU implement more tariff’s, say in the automotive industry, the impact could knock 0.5% of growth from the US and EU economy.

The EU has said it will retaliate by imposing tariffs on a range of American goods and will move forward with raising a case against the US at the World Trade Organisation, who police world trade. If Trump responds to the EU’s counter attacks the trade conflict could escalate quickly.

Donald Trump’s attempts to safeguard jobs and the steel industry in the US might benefit the average American blue collar worker in the short term, but if American steel manufacturers are unable to replicate the same quality of steel that is currently being imported, at a competitive price then they will face high costs and disruption to their steel production levels.

What will the impact be for steel users?

In recent months demand for steel products has been low, despite prices increasing steadily throughout the first half of 2018. Consumers will be the ultimate losers from a trade war.

Years of globalisation has meant that retailers sell goods from all over the world, so higher tariffs on imports will push up the cost of goods and services. Manufacturers will have no choice but to raise prices to deal with higher costs of raw materials.

In conclusion, we need to accept that goods and services will begin to increase in cost over the next few months. Steel producers across the globe remain very bullish and are insistent that prices of steel products must continue to increase even though demand in certain areas remains low.

The second half of 2018 will be an interesting time for world trade.

Andy Evans
Managing Director
SSC Laser Cutting

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