Tariffs on imported steel seems to be having some positive effects domestically, especially for US Steel. Not only has the company’s profits gone up, but they say that the forecast remains optimistic.
The longtime company said its quarterly profits increased almost 40 percent. Now that the company raised its full-year profit guidance, US Steel is getting the market excited by touting what it expects to be a tripling of profit.
The tariffs helped domestic steel prices increase by 5 to 10 percent during the quarter of focus. Prices of its US-made steel rose 5% to 10% in the quarter. As shipping increases revenue too, US Steel expects its steel tube business to start turning a healthy profit in coming months.
The tariffs at play here slap 25 percent fees on the majority of imported steel, with the same applying to aluminum imports at a rate of 10 percent. After making a lot of noise about other countries ripping off America, President Donald Trump sent a message heard ‘round the world when he announced the tariffs in February.
The reduced competition clears up the market for domestic companies like US Steel to increase its prices, with potentially more profits to come soon once old long-term contracts with buyers from before the tariffs expire. Because the prices in those deals are set, the price can’t reflect the market like the rest of the steel the company sells.
The profits aren’t just lining the pockets of investors and executives though as money has poured back into reinvestments, like opening back up a blast furnace in the Midwest and preparing to bring back the production line at a much fuller force.
Other steel companies like Nucor have gotten in one the profits too, with profits doubling in the last quarter. Other companies like Reliance Steel and Aluminum and AK Steel have seen increased revenues as well.
“We are encouraged by the Trump Administration’s actions to address the threat to the US manufacturing base, our economic competitiveness and our national security from unfairly traded steel imports and global excess capacity,” the company’s statement that CNN obtained said.
The news isn’t good for everyone, especially for the companies who have to actually purchase the more expensive steel and aluminum.
The Jewish Voice has been reporting on the tariffs, including how they will affect New York. Builders and distributors in the city saw a surge in metal prices used to needed to build sites just from the anticipation of the tariffs.
Since November, plate steel prices increased about 15 percent in New York. At the same time, the price of beams, which is the most common product sold in the city and the biggest metal expenditure for a typical steel-skeleton skyscraper, rose about 10 percent over the same time period. New York will still have to wait a little longer before judging the early results of the tariffs, though the domestic steel and aluminum industries seem to suggest that some positives could come.
By: Pat Walters