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Update on the New Aluminum and Steel Tariffs

Steel tariffs

On March 8, President Trump signed two proclamations imposing tariffs on imported steel and aluminum, however Mexico, Canada and the EU were granted temporary exemptions while discussions between the countries occur. The deadline for an agreement was June 1st.  Effective at midnight tonight, the measure levies a 25% tariff on imported steel and a 10% tariff on imported aluminum for the EU, Mexico and Canada. Retaliation from those countries on US goods like blue jeans and liquor as well as other exports could be levied.  Other countries have capped the volume of metal shipped to the US in lieu of tariffs.  Let’s take a look at some of the pros and cons of these tariffs.


They will bring back jobsThe Washington Post reported that some executives in the aluminum and steel industry have said they will begin hiring for jobs that pay $60,000 per year as soon as the paperwork is signed. And U.S. Steel has announced it will reopen a plant in Illinois, while Century Aluminum stated the tariffs could potentially create 300 new jobs in Kentucky.

They will restore our nation’s security – The CEO of U.S. Steel, David Burritt, said in the Wall Street Journal, “Our national and economic security is only as strong as our country’s ability to produce steel from beginning to end within our own geographic borders.” A report by Secretary of Commerce Wilbur Ross also cites the need for maintaining an adequate domestic production of steel and aluminum for use in defense, aerospace, and infrastructure.

They help level the playing fieldThe New York Times reports that foreign producers of steel and aluminum often receive subsidies from their governments. These incentives serve to drive production up and prices down. Lower prices can be good for consumers, but bad for producers, who are sometimes simply forced out of business. Tariffs can help balance these foreign subsidies and protect American metal producers.


They hurt companies, workers, and consumers – Approximately 5.4 million workers in steel-consuming manufacturing sectors will be hurt by higher steel prices as a result of these measures. In addition, Goldman Sachs projects Ford and GM will both lose $1 billion each this year due to the tariffs. The higher material costs will also be passed on to consumers in the form of higher prices, acting as a punitive tax.

They haven’t worked in the past – In 2002, the Bush administration imposed steel tariffs to protect the steel industry from specific competitors. The plan backfired, allowing producers to raise prices of domestic steel with no impact on employment. However, an estimated 200,000 workers lost their jobs in downstream industries in subsequent years – more workers than in the entire steel industry.

They are simply not necessary – The U.S. steel industry is not dying. In fact, 70 percent of the steel used in the United States today is produced domestically. In addition, production levels have remained virtually the same over the past few decades; and since 2010, have actually increased.

KPS Global® is the industry-leading manufacturer of insulated panel systems where both steel and aluminum are key raw materials for our product.  We will continue to monitor the tariff situation so that we can remain competitive.

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