Tariffs put dent into metal firms

US metal forming industry finding steel, aluminum levies a burden

When Bill Adler, owner of a metal stamping company in Ohio, prepared to bid on a contract to make commercial sausage stuffers for a company looking to replace its Chinese supplier last year, he believed he could match the competition.

But with a 25 percent tariff on imported steel and 10 percent on aluminum imposed by the Trump administration, the price of raw materials increased about 50 percent from last October.

Not only did Adler's bid fail, the $1 million in new factory investment and 10 new jobs it would have created have evaporated, and the future of his business is in doubt.

"If it wasn't for the increase that came on because of the threat of tariffs, then I honestly believe we'd be supplying these domestically," Adler told The Washington Post. "This directly affects my life, my employees, my investments."

As many US steelmakers recently see growth in business and cheer US tariffs that could encourage more domestic production, Adler's company, Stripmatic Products Inc in Cleveland, is among thousands of small and medium-sized companies in the metal forming industry – which includes processes such as stamping, spinning and fabricating — that say the tariffs are hurting their businesses and costing them jobs.

"People in the metal forming industry are really struggling right now with increasing (material) prices and longer lead time on material," Roy Hardy, the president of the Precision Metalforming Association (PMA), a trade association representing the $137 billion industry in the US, told China Daily.

"Many of them are not able to pass those increases on to their customers, and it is "harder to deliver their parts and components on time".

Hardy said the association's monthly business conditions report shows that nearly 20 percent of metal forming companies anticipate a downward trend in orders for the next three months, with 20 percent predicting a decrease compared with 10 percent who expected a drop in May.

"The jump in those metal forming manufacturers who anticipate a decline in activity is related to the 25 percent tariffs imposed on steel imports," said Hardy. "Reports from PMA member companies show that all steel prices have increased, in some cases by more than 50 percent, and delivery times are going from days to weeks and even months.

"For many of our members, the (cost) of the raw material could be as much as 60 or 70 percent of the cost of the finished parts," Hardy added. "So the increase is significant."

"The US is becoming an island of high steel prices, which will result in metal forming manufacturers losing business to overseas competitors who can buy steel at global prices," he said. "Tariffs are taxes, and if these tariffs continue, any benefit gained from tax cuts and regulatory reform will be wiped out."

According to the report, the percentage of metal forming companies with a portion of their workforces on short time or layoffs increased to 4 percent in June, up from zero in May. At this time last year, only 2 percent of companies reported workers on short time or layoff. 

Many US manufactures that use imported steel and aluminum are seeking their way out by filing tariff exemptions, arguing that they depend on imported steel, and that domestic producers can't fill the gap.

More than 22,500 applications for exemptions have landed at the Commerce Department in Washington, and many more arrive each day. More than 4,000 objections have been filed, a number that is expected to grow.

Only 98 applications had been processed as of last week, and of those, only 42 were approved, according to the department.