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Will Metals Tariffs Change Anything?

August 7, 2018 By Young Research

By momente @ Shutterstock.com

According to Kim Mackrael of The Wall Street Journal, tight trade links make it unlikely that tariffs will change business behavior in metal-intensive industries. She writes:

Lakeshore, ONTARIO—Across the border from the U.S. auto capital of Detroit, a Canadian company here buys aluminum made at smelters in Quebec using bauxite from Africa or Brazil that Ford Motor Co. puts in America’s best-selling pickup, the F-150.

The tightly woven production chain illustrates the U.S. dependence on aluminum from Canada that many say is unlikely to change despite recent metals tariffs the Trump administration hopes will boost the American metals sector.

“The reality is there’s not enough aluminum made here,” said Eric Krepps, who runs the North American automotive business at Constellium NV, a Dutch aluminum company. “We could not source everything out of the U.S. even if we wanted to.”

Instead, the 10% tariffs are already adding costs right down the supply chain—directly through the duty paid at the border and indirectly though higher aluminum prices, delays and added bureaucracy, manufacturers say. Tariffs have contributed to a doubling in the premium paid for North American aluminum since January.

Analysts and some car companies say the higher aluminum prices will likely be passed on to American car-buyers rather than absorbed entirely by companies.

Canadian-made aluminum is used for hundreds of different U.S. auto parts. The U.S. tariff on the metal, first imposed alongside steel tariffs in March, was extended to include Canada, the European Union and Mexico at the beginning of June.

Read more here.

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