Article from Reason by Eric Boehm.
Less than a month after President Donald Trump announced new tariffs on imported steel and aluminum, the CEO of an Ohio-based manufacturing company says his business is already paying significantly higher prices for rolls of steel—and that he will have little choice but to pass those costs on to his customers.
Mike Schmitt, CEO of The Metalworking Group, tells Reason that prices for cold-rolled steel have jumped by 18 percent since January, while hot-rolled steel (a less-well-finished and less expensive product) has increased in price by 30 percent.
“The reality is that those are traumatic increases. They are shocks to our system,” Schmitt says. “This isn’t a level of price increase where you can say ‘oh, I’ll negotiate a little bit of it.’ You have to pass it on.”
The Metalworking Group operates in the middle of the supply chain, buying raw steel from suppliers and cutting, stamping, or machining it into components for a wide range of industrial uses. Schmitt says he has several different contracts with steel suppliers, with prices usually updated every three months to avoid the difficulty of adjusting every time the price of steel fluctuates. Major contracts signed in January are expiring at the end of the month, and his business will have to start paying the higher prices in April.
Read the entire article at Reason.
Image Credit: By Jericho [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons