In its latest American Steel Index report today, Business Forward, Inc. said tariffs are “destroying” demand for products manufactured in the US, as the US price disadvantage has nearly doubled since Section 232 tariffs were implemented earlier this year.
The monthly report compares the prices American manufacturers and their foreign competitors pay for hot and cold rolled steel. US steel prices have risen 7.4 percent since February, while competitors’ prices have fallen 9.8 percent, the report said.
According to the report, the difference between US and competitors’ prices is 1.8 times larger since February, and American manufacturers are paying 17.2 percent more than their foreign competitors for hot and cold rolled steel.
“President Trump’s tariffs on steel and aluminum are increasing consumer prices and hurting American exports,” said Business Forward president Jim Doyle. “American manufacturers have started shifting production overseas, and they are cutting back on capital investment. The long-term costs are becoming clear.”
The report said months of higher steel prices have caused US manufacturers to switch strategies: Now they are importing more finished products and manufacturing less in the US. The Business Forward report explained this phenomenon, called “demand destruction.”
“Multiple US manufacturers (that are able to) are planning to shift production elsewhere and import a good with steel rather than manufacture stuff in the US,” said Josh Spoores, Principal Steel Analyst for CRU. “In order to have great manufacturing, a country or region must have cheap or affordable materials and energy. The US has energy, but steel is not cheap. You also will see substitution and once that comes, it is challenging for a switch back.”