Diadon Enterprises © 2017

Construction Industry Reacts as Trump Signs Off on Steel, Aluminum Tariffs | Columbus Ohio Dump Truck, Aggregate, Excavation Company

Fabricated Steel Frame
Fabricated steel frame on a Chicago mixed use project. Image: Jeff Yoders/ENR

With tariffs of 25% on foreign steel imports and 10% on aluminum signed by President Donald Trump March 8, U.S.

construction estimators and buyers have a bit more clarity what to expect when buying materials for future projects. An exemption in the order for steel imports from NAFTA members Canada and Mexico means some buyers can breathe a sigh of relief as their preferred suppliers will not be subject to the tariff—at least not yet.

The Presidential proclamation states that the tariffs are "necessary and appropriate" in light of "many factors considered," including a Dept. of Commerce Section 232 investigation into the effects of imports on national security. Updated import tallies and final steel and aluminum production numbers for 2017 were also taken into consideration.

“Whether the tariffs included fabricated steel or not, even if those harmonized tariff schedule codes that included fabricated steel were included, it still puts U.S. fabricators in a difficult position,” said Brian Raff, director of government relations for the American Institute of Steel Construction, “because it’s still allowing circumvention through Mexico and Canada so things don’t really change for the fabricators we represent on the construction side. Our position is, if action was to be taken, it needs to include fabricated steel.”

U.S.-based steel fabricators interviewed by ENR uniformly said that the tariffs would hurt their business and that not including imports of fabricated steel products in the tariffs would render the tariffs useless when it comes to imports from Canada and Mexico.

Raw steel shipped across the border is what the 232 action is aimed at protecting domestic steel mills from, but there is also the 1.2 million tons of fabricated steel made of foreign raw materials that came across the border in 2017. These products are the most likely to be used in buildings, roads, bridges and other construction projects, but were not addressed in the tariff action.

“The 232 action Is going to cause domestic fabricators’ raw material prices to go up,” said Don Banker, CEO and owner of Banker Steel in Lynchburg, Va., “the Nucors and other domestic mills are going to increase prices. We have already seen that. There was one increase just before the 232 was released and another the day after it was released and it’s causing our prices to increase. Because there is still no restriction on the import of fabricated steel, we’re going to be less attractive to our customers. It’s not an issue of can we pass on an increase, customers can just look at import fabricated and see it’s the cheapest product.”

Banker was in Washington D.C. meeting with members of congress and the Trump administration to press for a similar tariff against fabricated steel and aluminum and said that everyone he talked to, including Chairman of the House Judiciary Committee Congressman Bob Goodlatte (R-Va.), was willing to close what domestic fabricators see as a loophole for fabricated steel.

Banker said that one job his columbus oh aggregate supply company was involved in and lost out to a Mexican fabricator was 50 Hudson, part of the Hudson Yards development project in New York City.

On the supply side, there was uniform praise for the tariffs and support for the exemptions for Canada and Mexico as well as stopping circumvention of the tariffs, even for fabricated steel.

“We are optimistic that these tariffs will adjust imports to provide a level playing field and ensure that the steel industry in our country is able to serve our national security needs,” said Philip Bell, president of the Steel Manufacturers’ Association, a trade group that represents the U.S. steel industry. “We look forward to the measures being in effect for a period of sufficient duration for companies to reinvest in the steel industry. We also support limited exceptions for key allies, including Mexico and Canada, well-regulated exclusions for products not available from US producers, and mechanisms to avoid transhipment and circumvention of the tariffs.”

Bell described the re-opening of US Steel’s Granite City, Ill., steel mill as an example of how the decision has immediately helped manufacturers. One of the massive plant’s blast furnaces is restarting after sitting idle since 2015 and US Steel has said that 500 workers will be recalled to their jobs.