Abdelrahman
Business reporter, BBC News
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A new 25% tax will be levied on all steel and aluminum imports into the United States, eliminating previous exemptions for goods from key trading partners like Canada, Mexico, Brazil, and the European Union.
The broader tariff policy, announced by President Donald Trump and scheduled to take effect next month, will result in increased costs for U.S. companies looking to import these metals.
There is a potential for businesses to transfer these added expenses onto consumers.
Given that steel and aluminum are crucial ingredients in numerous products, which items might see a price hike?
Canned Foods, Beer, and Soft Drinks
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Currently, approximately 70% of the steel utilized in the United States for can manufacturing is imported from nations like Germany, the Netherlands, and Canada, according to the Can Manufacturers Institute (CMI), which represents can manufacturers.
Following Trump’s 2018 steel tariffs, many can producers received “exclusions” from these import charges, despite strong objections from domestic steelmakers due to the limited availability of the type of steel used in can production domestically.
Since that time, steel manufacturers have further reduced production, resulting in higher prices, as cautioned by the CMI. This organization sent a letter this month to the Trump administration expressing their concerns, signed by notable food companies such as General Mills, Del Monte, and Goya.
CMI president Robert Budway stated that if can manufacturers are not exempted from tariffs on imported steel, grocery prices for U.S.-produced canned goods are likely to rise significantly.
“While the president believes these tariffs are protecting the steel industry, they are undermining food security and supply resilience for American canned foods that consumers rely on daily,” remarked Budway.
In terms of aluminum, brewers and carbonated beverage manufacturers, including Coca-Cola, have also indicated that this decision will escalate costs and may result in higher prices for consumers.
“We manage sufficient variables to adapt to and navigate through this situation,” Coca-Cola CEO James Quincey shared with investors this week.
Trump has stated that there will be no exemptions for individual products or specific countries this time around, though some industries still hope for a reconsideration.
Automobiles
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After Trump instituted tariffs on steel and aluminum during his initial term, automakers like Ford and General Motors cautioned that the regulations would raise their costs by approximately $1 billion each.
A previous analysis by Morningstar indicated that these tariffs could result in about a 1% price increase, or around $300, for consumers.
Analyst David Whiston pointed out that Ford might face similar cost increases this time, but the influence on consumers remains uncertain.
Ongoing affordability challenges in a marketplace where sales haven’t yet returned to pre-2019 levels may restrict the extent to which companies can pass along these costs, as noted by Michael Wall, an automotive analyst at S&P Mobility.
However, Wall believes it’s still reasonable to expect some of these costs from the metal tariffs to be reflected in vehicle prices.
Additionally, Trump’s recent announcement regarding comprehensive tariffs on goods from Canada and Mexico, currently postponed until March, could significantly impact consumers.
During a business conference, Ford CEO Jim Farley expressed that Trump’s decisions are creating significant cost burdens and instability for the automobile sector.
TD Economics predicts that car prices could rise by about $3,000 if the broad tariffs targeting imports from Mexico and Canada are implemented.
Construction, Housing, and Appliances
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The construction sector is one of the largest consumers of steel, which is essential for everything from structural frames to appliances used in homes.
Carl Harris, chairman of the National Association of Home Builders, stated that implementing tariffs on steel and aluminum contradicts Trump’s aim to make housing more accessible, warning that it will increase costs and hinder development.
“Ultimately, it is consumers who will bear the cost of these tariffs through higher housing prices,” Harris cautioned.
The National Association of Home Builders has urged the administration to exclude building materials from the proposed tariffs.
Following the steel tariffs announced in 2018, appliance manufacturer Whirlpool confronted an unplanned cost increase of $350 million attributed to rising steel expenses.
Companies unable to absorb these surcharges would likely need to raise prices for consumers in retail outlets.
