Trump's tariffs may not be in effect yet, but consumers are already feeling the pinch
The steel industry is already taking matters into their own hands
On Monday, the Metalworking Group of Cincinnati received notice of a 35% increase for American-made cold-rolled carbon steel. Yes, you read that right. American-made. Not imported steel or anything like that.
It's a plight faced by American businesses and consumers alike, and no matter how you look at it, this is essentially what tariffs do.
A WSJ opinion report interviews a Mike Schmitt - whose company makes a variety of parts and components from medical devices to the oil-service industry, of whom many of the customers are multinational companies which tap suppliers from around the world - and he had this to say:
Commerce Secretary Wilbur Ross says the effects of the new tariffs are de minimis. But in the real economy as opposed to Washington, Mr. Schmitt says the tariffs hurt his company's competitiveness: Steel is roughly 40% of the company's costs, so a 35% price increase on all steel purchases translates into a 14% negative margin impact.
That's a lot for a small company. Mr. Schmitt can try to pass the costs onto customers, but as he told us Monday multinationals may decide to use supply chains in Europe or elsewhere if they offer better prices.
Mr. Trump has exempted Canada and Mexico from the tariffs, and he says he may exempt others. But Mr. Schmitt says the steel suppliers are "not standing by and waiting to hear about exemptions." They are raising prices now, and last week the company received a price increase of 25% for hot-rolled steel.