Impact of New Tariffs on Iron, Steel, and Aluminum Unclear Thus Far
October 9, 2018
The United States announced new steel and aluminum tariffs last March, under which steel imports would face a 25 percent duty and aluminum imports would be subject to a 10 percent duty. These tariffs were imposed pursuant to Trade Expansion Act of 1962 and were specifically done under Section 232 authority (“Safeguarding National Security”), which provides that action may be taken if an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.
The steel products that were subject to this levy is fairly broad, and includes finished products, such as carbon and alloy sheets, pipes, strips and plates, seamless or welded tubes, and stainless steel. Also included are semi-finished products, such as solid forms of unfinished steel meant to be further fabricated into final steel products. Aluminum products subject to this tariff included unwrought (raw) materials as well as processed materials, such as bars, rods, wire, foil, tubes, pipes, fittings, castings and forgings.
Steel and aluminum tariffs potentially impact many parts of the economy where coatings are used, including durable goods manufacturing (especially motor vehicles), construction and other infrastructure, and packaging, including containers for coatings products.
One would normally expect substantial tariffs on such primary materials as iron, steel, and aluminum to affect both demand for imported products in those categories, as well as price impacts due to supply constraints as well as the impact of the tariffs themselves. Looking at the data through August, it is unclear what impact the tariffs are having thus far. Looking at the broad category of “Iron and steel products,” there has been steady price appreciation since October 2017, which preceded the imposition of Section 232 tariffs, while imports in this category appear largely unaffected by the tariffs (Figure 1) through August 2018.
For aluminum products, the data are somewhat different. As shown in Figure 2, price pressures abated somewhat in the summer 2018 period, while demand for imports feel significantly during the period starting March 2018 (although March import figures reflected a somewhat out-of-trend peak, possibly reflecting import activity that might have been accelerated to beat the imposition of tariffs that became effective March 23, 2018).
Many manufacturing sector groups, including ACA, have raised concerns with the U.S. Trade Representative about the impact of these tariffs (and others) that are imposed on intermediate goods used as inputs into manufacturing, but the full impact of the Administration’s trade strategy will clearly be unfolding in the months ahead.
Contact ACA’s Allen Irish for more information.
 “UPDATE: Additional Duty on Imports of Steel and Aluminum Articles under Section 232, https://www.cbp.gov/trade/programs-administration/entry-summary/232-tariffs-aluminum-and-steel