What is more expensive steel going to mean for the crane industry?
Not long after President Trump implemented 25 percent steel tariffs and 10 percent aluminum tariffs, construction industry insiders say their steel costs are already up to 10 percent, according to a report by National Real Estate Investor.
It’s too soon for raw material costs to affect manufacturers of mobile cranes and other construction equipment, so how can that be? Turns out it’s speculation about future price increases that is pushing up prices.
Trump says his goal is to incentivize U.S.companies to buy steel and aluminum from domestic producers, driving domestic producers to make more steel and aluminum and employ more people. Steel and aluminum jobs have declined in recent years, so states in steel-producing states are optimistic this could mean more jobs.
Critics say Trump’s tariffs will hurt industries that depend on steel and aluminum, especially auto and construction, which together employ more than 7 million workers. By comparison, steel employs around 160,000. They could also spark a trade war that will harm many other industries and result higher prices for everyone.
More efficient production techniques may be more to blame for declining steel jobs than foreign competition. Each ton of steel produced today takes a mere 1.5 worker hours. The same process took more than 10 hours in 1980.
Just as with other manufacturing jobs, technology and automation are to blame for job losses—not foreign production.
In 2017, 1.2 million tons of fabricated steel was produced in the U.S. with imported materials, most of it used for bridges, roads and buildings. Since the tariffs target "raw” steel, American steel manufacturers may actually be the hardest hit. Engineering News Record has reported that some domestic fabricators have already lost jobs to competitors abroad.
The panic isn’t without precedent. A tariff imposed on imported Canadian timber in November, led to a nationwide rise in home construction costs. Contractors have been raising construction costs in response. However, Trump’s tariffs currently don’t include steel coming from Canada and Mexico. Canada is America’s number one foreign supplier of steel, at 16.7 percent of total imports; Mexico is number four, at 9.4 percent. Brazil and South Korea have the second and third spots. The top four countries that send aluminum to the U.S. are Canada, Russia, the United Arab Emirates and China.
We don’t know how the tariffs will affect the ongoing construction boom, but those in the steel industry are still on board with Trump’s bold plan. Here in the Atlanta area, construction is strong and will continue to be so. But time will tell if things slow down in the other states we service.
If you have any thoughts about how the rising cost of imported steel will impact crane manufacturing, commercial construction, let us know. We’d be happy to hear from you.