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Navigating the Waters of the Newly Implemented U.S. Steel Tariff Laws

Magnetic Shield, Magnetic Shielding March 10, 2018

 

On March 23rd, 2018, President Trump’s imported steel and aluminum tariff will officially take hold, which comes with it mixed reactions from myriad vantage points / industries.

The proposed (and implemented) tariffs amount to a 25 percent tariff on imported steel and a 10 percent levy on imported aluminum. Originally, President Trump proposed the tariffs to be applied to global imports unanimously, but an amendment was made to carve out Canada and Mexico for the time being.

NPR reported that Canada is the leading supplier of imported steel and aluminum to the U.S., accounting for 16 percent of imported steel and 41 percent of imported aluminum. They went further to say that critics worry that tariffs will increase costs for businesses and consumers and could spark retaliation from America’s trading partners.

We, at MuShield have had a number of inquiries following the proposal of the tariffs and how they’re implementation will affect the products we’re manufacturing, and the industry as a whole.

The short answer is, we will be impacted. We’ll get into that in a second…

CNN dropped a report stating that both metals are crucial raw material for autos, airplanes and appliances made in the United States. The construction, oil and utility industries use them for beams, pipelines and wires, as well as cans for food and drinks. According the U.S. Commerce Department, steel and aluminum imports make up about a third of the 100 million tons of steel used by American businesses every year. More than 60% of the overall supply of aluminum comes from imports, according to the Aluminum Association, citing 2017 data. For years, imports have caused trouble, and led to plant closings, for the U.S. steel and aluminum industries.

So, how does this relate to MuShield and the magnetic shielding industry?

Let’s try to make some sense of it.

Indirectly, the tariff will impact MuShield and the magnetic shielding industry, but fortunately, it shouldn’t be a drastic negative, as some are fearing. We use 400 series stainless for some magnetic shielding applications, but that is a very small part of our business. Where we could see an impact is in our tooling and fixture costs, as well as increased costs to our hydroformed products that are made from stainless steel or aluminum alloys.

Almost all of the mumetal and magnetic shielding jobs that run through our shop have some sort of aluminum fixture or steel tooling used to assist in manufacturing / fabrication. Some jobs already have the fixtures and tooling made, or we can use stock fixtures and tools, so repeat work shouldn’t see much impact from these new steel and aluminum tariffs. For new jobs, however, we may have to consider this tariff when pricing out the job because of the 25% increase to steel and 10% increase to aluminum obviously drives up the base cost of raw material. Risk like this is built into our pricing structure, so our customers shouldn’t feel feel any sort of major impact from tooling or fixture costs going up.

Often times we hydroform various steel or aluminum alloys into custom shapes for our customers. In most applications, the material cost is about 25% of the overall job. If we see the pricing for steel jump 25% and aluminum jump 10%, that increase will probably carry over to our final quoted price. Of course, we will do everything we can to limit the impact of this tariff, but it will have a very real impact on the sheet metal industry – which will trickle down to us at some point.

Have questions? Give us a shout. We’ll happily talk through any of this with you – no tariffs attached.

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