Steel, Aluminum Import Tariffs Should Have ‘Limited’ Impact on Sector

With U.S. government plans in motion to impose tariffs on steel and aluminum imports, industries in the sector are left wondering what potential risks might be coming their way in regards to future business operations. A direct impact on the nation’s steel and aluminum producers will most likely be “limited,” said Fitch Ratings; however, retaliation from other countries could restrict global growth.

President Donald Trump brought attention to these tariffs earlier this month when he shared plans to impose them on 25% of steel imports and 10% of aluminum imports. About 0.3% of U.S. GDP is from iron, steel and aluminum imports, Fitch reported. More reports have already surfaced that the European Union is planning to retaliate with tariffs of their own if the U.S. tariffs pass.

As many political and business figures react negatively to the news, international law firm Foley & Lardner LLP reported on March 5 that steel and aluminum companies were pleased with the proposed tariffs. The report cited comments from the American Iron and Steel Institute, which said the tariffs will “combat an import ‘surge’ in 2017 and large amounts of worldwide excess steel capacity.”

“If the tariffs are successful in reducing the overall level of imports,” Fitch added, “they should result in higher domestic production volumes, capacity utilization and prices, supporting profit margins from 2018 onward.”

Any risks will only grow if countries take “protectionist measures,” Fitch said.

-Andrew Michaels, editorial associate

No comments:

Post a Comment