All US consumers of steel and aluminum will pay higher prices, especially the automakers.
Bloomberg reports Trump Unveils 25 Percent Tariffs on Steel and Aluminum.
President Donald Trump, speaking to reporters Sunday on Air Force One, said he would announce new tariffs on steel and aluminum from all countries.
Sunday’s move is Trump’s latest in a series of threatened tariffs on countries and specific sectors that have rattled markets in recent weeks. Yet it’s uncertain whether he’ll follow through — he announced, then paused, tariffs on Canada and Mexico, while proceeding with levies on China.The US relies on aluminum imports from countries including Canada, the United Arab Emirates and Mexico, to meet the vast majority of demand — net imports added up to more than 80% in 2023, according to Morgan Stanley. Steel imports account for a smaller portion of overall consumption, but are vital for sectors leaning on specialty grades, including aerospace, auto manufacturing and energy, from wind developers to oil drillers.
Tariffs Not Easily Averted
The Wall Street Journal reports Trump’s Next Round of Tariffs—25% on Steel and Aluminum—Won’t Be So Easily Averted
“Very simple, they charge us, we charge them,” Trump said Sunday. Those will go into effect “almost immediately,” Trump said.
“Tariffs are going to help. Tariffs are going to make it very successful,” Trump said as he previewed the new levies on Sunday afternoon to reporters flying with him aboard Air Force One en route from Florida to Louisiana, where he attended the Super Bowl.
Congressional Republicans are largely on board with the use of tariffs to address structural trade issues, such as subsidies and discrimination. But they raised some questions about Trump’s plans to use duties to raise revenue.
“I’ve heard figures of almost $1 trillion in revenue or replacing the income tax, and I’m just not seeing it,” Sen. Ron Johnson (R., Wis.) told U.S. Trade Representative nominee Jamieson Greer at his confirmation hearing last week. Greer conceded that the administration is “not in a position to, tomorrow, fund the government using tariff revenue,” though tariffs were an important revenue source in U.S. history, particularly in the 19th century.
In addition to tariffs on products that Trump previewed last week, such as semiconductors, Trump’s aides and allies warn that the European Union and South Korea also are in the firing line because of taxes, regulations and penalties they have imposed on U.S. tech companies such as Alphabet’s Google.
“I think Europe is in for a massive trade war,” said Robert O’Brien, Trump’s first-term national security adviser. “I do not believe the president is going to put up with this type of action against America’s biggest companies.”
Trump has long complained that the U.S. buys more from the bloc than it sells to it, and said last week tariffs on the EU “will definitely happen.”
Higher Inflation?
That is the subject of much debate.
Higher prices did not happen much under Trump I tariffs because a higher dollar and tariff avoidance eased much of the pain.
Also higher prices and higher taxes will reduce demand. That’s a third factor.
Notably, tariffs on steel and aluminum are much higher to avoid. There is no way hide commodity prices by routing through Vietnam.
Finally, tariffs are a tax on consumers, no matter what Trump thinks. Some small parts makers may go out of business.
It’s no so simple to say “tariffs didn’t raise prices much the first time so they won’t now.”
There will be a negative impact either in prices, a slowing economy, retaliations, or all three.
For further discussion and many charts, please see my post last Friday Trump Announces Reciprocal Tariffs Next Week, a Major Trade War Escalation
Also see my January 18 post The US Trade Deficit with China is Understated by as Much as 30 Percent
Normal trade math does not add up. US imports and China exports are not in sync.
I asked Brad Setser, senior fellow for international economics at the Council on Foreign Relations, and Director of International Economics, for the United States Department of the Treasury to comment.
Setser replied “Chinese exports started exceeding US imports only in those categories with tariffs, and only after the tariffs were imposed.”
I commented “This appears to be an amusing case of China cleverly avoiding US tariffs but not clever enough to hide it better.”
These tariffs will not be so easy to hide. I expect Canada, Mexico, and China will respond.
Does this mean there is an aluminum smelter coming close to you?
Will smelter jobs exceed the jobs lost in industries that will see their costs rise and their exports dwindle?
Came across this in my reading today:
I wonder if Trump’s Jewish advisors have informed the Big Guy about how badly things turned out for Europe’s Jews after the Smoot-Hawley tariff was passed in 1930 by a Republican Congress? 1931: the failure of a Rothschild controlled major bank in Vienna (CreditAnstalt); 1932: German unemployment reaches 25%, the Nazi party receives a plurality (but not a majority) of the votes in two national elections in Germany; 1933: Germany’s president asks Hitler to form a government with one of the smaller parties; book burnings in university towns all over Germany including Berlin.
This time may be different, but maybe not.
It would be hard to burn all of the porn and smut this time, since most of it is online now.
Versailles isn’t involved, so quite plainly the situations are dissimilar. Germany was on the path to ruin before, during, and after Smoot-Hawley. Leave the hyperbole for campaign season.
The notion that consumers bear the full cost of tariffs is wrong. As with any sales tax, the tax burden is shared between seller and buyer, and the way it is shared depends on the elasticities of demand and supply as both parties seek alternative sources of supply or demand. The response of the Chinese (higher tariffs on imports from the US) indicates that Trump’s tariffs cause real pain to Chinese suppliers. I note also that the traditional Ricardian analysis of tariffs gets much more complex when very large imbalances in trade are present so that consumers massively forgo future consumption for the privilege of higher consumption in the present. To the extent consumers’ underestimate the cost of foregoing future consumption, a forced decrease in present consumption might be optimal.
Yes. The cost can be split between the US importer and the US consumer.
In addition, the notion that the exporting country pays the tariff to the US government is also wrong. Though Trump keeps telling us that’s how it works.
The cost is split between the Chinese exporter and the US importer (who passes his portion along to US consumer). We know the Chinese exporter pays a share because his government levies countervailing tariffs on US exporters who also feel the pain. If none of the cost accrued to the Chinese exporter why would his government put tariffs on imports from the USA?
Lol! Maybe you should look it up. There are dozens of places where you can find the correct answer. Such as the tax foundation.
https://taxfoundation.org/blog/who-really-pays-tariffs/
I regularly read of scientists developing materials “stronger than steel”. See:
https://scitechdaily.com/search/stronger+than+steel/
This seems like a good time to rush some of these new materials to market!
A tariff that can solve a problem today; saves jobs or is reciprocal to unfair treatment seems like a traditional tactic. Tariffs only to create an income stream indicates an economy slowly withering away and the standard of living that it once supported will be going as well. Tariffs intended to spur new factories is really hard to grasp for me. The time required to decide and build such factories under the motivating tariff will cook your bacon long before the short term pain turns into long term gain. We don’t have years here, we have months.
Tariffs intended to spur new factories is really hard to grasp for me. The time required to decide and build such factories under the motivating tariff will cook your bacon long before the short term pain turns into long term gain.
Trump is making decisions based on ideology rather than sound economic principles. Not likely any new plants being built in the United States especially aluminum. A new greenfield aluminum plant not only requires the construction of the plant but an accompanying energy supply preferably hydroelectric usually in the range equivalent of supplying a million homes. Reshoring may sound good to the base but when logic enters the equation it is not economically feasible. Not 1 new plant will come into operation during Trumps term.
Even existing brownfield plants in the US unable to source the continuous needed energy.
The Aluminum Smelter in Search of a Power Source | Post Alley
“The hitch: plugging in
“melting aluminum demands a LOT of power — a steady load of 405 megawatts to fully operate the Intalco plant, nearly equivalent to the total capacity (450 mW) of Seattle City Light’s Ross Dam on the Skagit River. Cheap hydropower drew the smelters to the Northwest in the first place, and rising power prices helped drive them overseas. Blue Wolf seeks the sort of guaranteed power supply and pricing that smelters and a few other industries long enjoyed in the Northwest. “
Last time he did that the US steel makers got hit, companies tightened spending
Seems like he’s trying to move half of federal jobs to the private sector. Productivity should go up.
Unemployment too! Serfs are born to suffer for the rich.
If all the illegals are sent back home they’ll be plenty of jobs and unemployment will be low.
Especially when Trump/Doge clear the roles of the fake Social Security disability claims, forcing these people back to work.
How will they they be able to tell if they’re fake?
Musk likely will recommend social media data harvesting to find the able bodied. Also, lack of ongoing medical visits may indicate the disability is a sham. The feds can access Medicare data and can probably find ways to access private health insurance data.
Thanks, hope they catch the cheaters!
They all are! Work or die!
Not buying it.
Broccoli to be picked! Toilets to be cleaned! It’s time Americans learned their true value.
Nothing wrong with those jobs. If they don’t like them they can learn some skills. Matter of fact, it’s those type of jobs that motivate folks to better themselves.
I love broccoli! And really not expensive at less than $2/lb commonly.
I can’t imagine the poverty pimps picking lettuce in Salinas, CA.
The irony is that just about all of Canada’s steel and aluminum companies started out as subsidiaries of American companies and about 50% of them still are. It looks like Trump wants them to move back to the US like he wants the US car companies to move back too.
Well let’s run the traps Doug. Trump wants ALL manufacturing back in the U.S. How many people will be needed given we have 4% unemployment now to build all those steel plants, aluminum plants, auto plants, auto parts plants, microchip plants, etc.
Bonus question: where will these people come from?
Um, if you use robotics heavily, then a lot less than you’re suggesting, MPO45v2.
But again, you’re already know this, so you decided to throw out a straw man argument.
Who knows? Maybe we’ll invite a bunch of Canadians to come down on H1-B visas rather than encouraging millions of illegals from south of the border.
Nice post, Doug!
wait a minute so all these factories being built to bring production home, you are telling me that creating jobs is not the point? They are all going to be automated? So all the profits will go to the owners of the factories? That completely undermines the whole reason for these tariffs in the first place which is supposidly jobs and wages but you are saying its to enrich the owners of the capital. the point is for the rich to get richer?
Nice reply Howard. You just checkmated JayW. I will add, if robots are doing the work, why do they need to be in the U.S.?
There’s absolutely zero checkmate here. Did I give a %? NO
Let’s assume it’s 50/50. That’s 50% more Americans working in good, high paying jobs than we’d have otherwise.
Within 10 years, automation is going to have extremely dramatic effect on manufacturing.
Oops, the cat’s out of the bag.
Also who’s going to be one of the largest makers of humanoid robots?
President Elon Musk’s Tesla.
Thanks
Who wants to work at McDonalds at minimum wage when with some training you can make four or five times more? If you make the job attractive you will find workers. Even marginal bloggers making less than minimum would change for the money and there are over a million of them. There is a lot of make-work and senseless cubical jobs out there. They suck your soul out.
So the people will be sucked away from restaurants? Is that your solution? Who will work at restaurants? Where are you going to get your big mac?
Come on central planner, walk us through the master plan.
And by the way, I worked fast food in my college days and now I make 1000x more than I did back then and neither tariffs, taxes, or government policy had anything to do with it, I did it all on my own.
Robot chiefs will make your food and robot valets will park your car and every time you go there you will be putting money into Musk’s pocket because they will be Optimus robots.
Let me congratulate you on your escaping the fast-food worker trap by sheer grit and boot-strapping yourself up to a high salary. In verity so few people have done what you have done going from burger-flipper in college to whatever you are doing now. Hats off to you.
Thanks Doug, that’s the power of free markets.
I got a buddy who wants to buy a few of those Robot Pizza machines and put it in the local high schools. He works at a high school and he is amazed how many Door Dash drivers show up delivery pizza from all the kids ordering pizza for lunch.
Fast food workers here in CA get $20 minimum per hour+benefits. I don’t believe anyone is paying factory workers $80-$100/hr.
Government unemployment numbers are bogus. Many people who want full-time jobs with benefits are stuck with part-work and gigs.
Currently, all of Canada’s steel mills are foreign owned. Either US owned or Arcelor Mittal from Luxembourg, to the best of my knowledge.
Stelco, Algoma, Spirling, and LMS Group from what I found are Canadian-owned but they are only a small part of Canada’s total steel sales. The group you mentioned is dominate in Canada.
Cleveland Cliffs owns Stelco.
Essar Global owns Algoma. Though I think it may have been recently sold back to a group of Canadian investors.
Arcelor Mittall owns Dofasco.
Sperling is a small privately owned mill in Manitoba.
LMS is a rebar supplier. Not a steel producer.
I forgot about the Cleveland-Cliffs deal.
I know. It’s difficult to keep up-to-date sometimes. All we can do is try our best and accept that we will miss the odd thing.
How long would it take to build new manufacturing facilities and get them up and running. Could this happen before Trump’s term in office expires?
2-3 years after permitting for a recently completed arc furnace by US steel.
The production of aluminum requires lots of inexpensive electricity to make economic sense.
Starting to see “I did that!” Trump stickers under price tags… shameful! The peasantry should suffer in silence!
I did that.
Steel and Aluminum. Thats a good start.
Now let’s go across the board. Tariffs on ALL imports from everywhere.
I am anxious to see the benefits that Trump keeps repeating:
Bring back manufacturing and jobs.
Pay off the deficit and pay down the debt.
Eliminate income taxes and make Americans rich!
Lower the cost of everything in America and eliminate inflation.
Bring on the golden age!
who is going to take up all these new manufacturing jobs? 4% unemployment and factories already have a near impossible task to find enough non-immigrants to stand on their feet all day doing hard labor for $20/hour. There is no slack in the labor market to support your wild delusions
Lol! They’re not MY delusions.
I just want Trump to follow through with all his tariff talk to see if it all works out like he said it would. It’s a real world experiment and I am anxious to see the results.
All the benefits I listed come from Trump’s own statements. I want him to prove it. If he does, he will have my admiration.
It ain’t braggin’ if you can do it. Otherwise it is.
Which is why I want him to tariff as many things as possible. It’s not a question of whether he CAN do it. It’s a question of whether tariffs will accomplish all Trump tells us they will.
A real world experiment in the economics of tariffs. Let’s try it and find out!
And if Trump is correct and we enjoy all those benefits; then he was right. But we won’t know till he tries.
And if it all goes to crap and crashes the US economy, then we will learn from it. Maybe.
They could stand on their feet 12 hours/day, 6 days a week for $3/hr like in China.
$3/hour is somewhat higher than what the Red Chinese pay their serfs.
If they find legal immigrants, that will be fine. A big issue is all the illegal. A friend who is a general contractor has always had issues contracting (1099) work out. She said they tell her they are legal and give fake Tax IDs or SSNs and then when she does her taxes, the IRS says that $100k you paid contractors was not to real people and thus you make $100k more than your claiming and owe tax on that $100k. The other thing they do is borrow a friends SSN and then pay their friend 15% of the money they make. But she said since the election, her pool of available workers to hire has dropped. LOL
My local lawn scape company employed 3 American citizens in their mid to late 20s. They had been mowing my yard for 3 years. A couple of white guys and an African American.
A bigger regional company that is expanding bought my landscape guy out last year. The 3 American guys were let go and were replace with 3 people who did not speak a lick of English and the prices went up 15%.
Just some boots on the ground.
What tariffs do Canadians charge for American products? Is Trump really responding to penalties Canada places on American products? Maybe he has a legitimate point and Canada has been doing this unannounced for years.
Nope. Canada has never charged tariffs on US goods, other than in response to tariffs that the US imposed on Canada. The US is Canada’s largest trading partner and it would be stupid for them to start a tariff war with the US.
So when Trump announced 25% tariffs on Canada, they responded with a $155 billion list of counter tariffs. That is what they typically do in response to US aggression. And then Trump backed off tariffs when business leaders were screaming at him and the stock market dropped. And Canada and Mexico did their best to give him a “win” with commitments to put more troops on the border.
I expect Canada will do the same this time. They will respond with reciprocal tariffs on US goods heading to Canada.
Other than responding to US tariffs, they never want to put tariffs on US imports.
Again, you have no idea what you’re talking about.
https://wits.worldbank.org/tariff/trains/en/country/CAN/partner/USA/product/all
Nice find. Thanks! It looks like Canada DOES have a few tariffs on US fish, meat, and poultry.
The data was from 2022. Do you know if those tariffs are still in effect today?
And do you know if they were in retaliation for some US tariffs?
Also, can you find any others? Perhaps something more significant than toothfish and birds of prey. I like to be as informed as possible.
I am surprised that Canada has a a tariff on primates coming from the US.
Me too. Never heard of it before. Something pretty inconsequential and odd though. Perhaps they are trying to help the few remaining “trappers” that deal in wild animals?
And I still don’t know if it was done in retaliation for a US tariff.
Canada’s dairy industry is heavily subsidized by the government so milk and cheese cost twice as much as in the US. Our forestry industry is also much different because it’s almost all logged on federal land and not private land like in the US. Canada has a tiny military and every Canadian assumes the Americans will keep us safe. Canada’s biggest challenge is hypocrisy.
Yep. Canada has a different system than the US. But it’s not tariffs.
This is completely false. We pay duty on everything we buy directly from US merchants and have been for years. We pay duty, excise taxes, import fees and other charges that are about 20% of the purchase price. The rule of thumb for Canadians is to double the price in US dollars and after the exchange rate, duties, import fees, excise taxes, GST, etc..
Still not tariffs.
In January 2024, estimated purchased steel scrap receipts decreased by 20%, estimated recirculating scrap production decreased by 3%, and estimated and iron and steel scrap consumption decreased by 18%
https://d9-wret.s3.us-west-2.amazonaws.com/assets/palladium/production/s3fs-public/media/files/mis-202401-fescr_0.pdf
Tea leaves say scrap production will reverse along with exports if the tariffs stick. I don’t know about the metal industry but on a 101 level, the tariffs would be good for the US scrap recycling industry. That’s more jobs, more dollars bouncing around in the US if scrap production is increased.
Keep ’em guessing leadership:
“Trump’s threats have changed over time, ranging from small levies to ones exceeding 200%, leaving other nations and businesses unclear of what is to come next.” Factbox-All of Donald Trump’s tariffs and threatened trade actions
And a penny for your thoughts no more…
Trump instructs Treasury to halt penny production | CNN Business
Your silence is golden; welcome to the Golden Age.
There is a cost to “keep em guessing” especially when you do not honor signed deals
Trump’s Tariffs & Sanctions Are Going To Drive Prices Even Higher.
Almost Everything Has Doubled.!
Housing, Rent, Insurance, Property Taxes, Health Care, Groceries,
Gasoline, Diesel, Vehicles, Utilities, Wood/Building Supplies, Etc.!
Core Inflation – Excludes ‘Volatile’ Food & Energy Prices.!
The Canadian dollar has fallen so far under Trudeau that tariffs on Canada will only bring prices back to the Harper era.
Canada will suffer the most with the steel and aluminum tariffs.
https://www.cnbc.com/2025/02/10/global-winners-and-losers-of-trumps-steel-and-aluminium-tariffs.html
So, today I was in the grocery store to subsidize them, and for some reason they sent me packing with a pound of beef and a lettuce. Coffee shop same story, I subsidized them for $6 dollar, then they gave me a latte.
Communist!
Appears the increased tariffs are good for the markets rather than the perceived negatives?
For now, Trump is the market’s Golden Goose. Not sure how long it’s going to last, but it will take a while for these tariffs to show up in CPI. So, there’s time for negotiations.
European cars next? Our cars to Germany are subject to something like 30% vs 2.5% here in the USA.
MAGA!
EU tariffs on US cars are 10%, not 30%.
US tariffs on imported light trucks have been set at 25% since the 1960s. While tariffs on car imports are just 2.5%.
Germans levy 10% tariff on non-EU imported cars. That’s it. Check it on internet.
China ETF and Emerging markets ETFs seem to be liking these tariffs too. It seems to have lit a fire under Chines stocks. I am sure the Chinese stimulus helps too.
China has been dumping steel and aluminum for years and the Japanese before that. There is no doubt consumers benefit from cheaper metals but the inputs to produce steel are aluminum are well known. China is selling the metals for less than the inputs. This is not competition nor free trade but downright cheating. As a side benefit, a lot of the critical minerals are also extracted when processing aluminum. We also don’t make plate steel so we can’t build a ship without foreign inputs. Selling your soul for a few dollars has hundreds of unseen consequences including strategic and economic. All extra dollars spend here stays here and not overseas. What would we think if China starts to sell and make aircraft and undercut Boeing for a few pennies less. No more cheating.
Yet China merely managed to carve for itself the fourth and fifth position, respectively, at such a great cost. Fancy that!
That’s what a noncompetitive country does.
The US steel and aluminum industries are hiring.
US metal co were comatose for decades. Only one, as far as I know, popped up, to a new all time high, doing what is right in high grade metals. The rest will breakout soon.
There should be a mandatory psychological evaluation of our presidents when they show clear signs of madness.
Did u vote for Kamala ?
He’s probably like Mish & voted for himself. And they call Trump a narcist, which he is of course.
One transvestite female president and one dementia president are enough.
My mind is cleaned with a nightly dose of ketamine. Im saner than you.
But not for congressmen? Please.
Aluminum requires so much electricity to smelt the plants are located right next to hydro dams. They also require deep water port for the bauxite raw material. Hard to duplicate. That is why aluminum investments have been made by US companies and others, in the locations they are found in Canada. I’m having difficulty understanding this tariff uproar, and it’s already aging rather badly.
Trump is not understanding the complexity of the Al and steel market.
There are hundreds of types of products for steel and aluminum (distributors still mail catalogs, which are 150+ pages). Your manufacturing application needs a very specific type of Al and/or steel, and you cannot simply swap them around for your industrial needs. There are all internationally sourced and the supply chains are mixed and would take a year or so to unmix. If you raise the price on “imports”, you just raised market price for everyone in the US
For instance, when making an aircraft, the most common choice for sheet aluminum for the skin plane is “2024T3-032” (which is an code for a sheet of a very specific high strength aluminum alloy sandwiched by two layers of pure aluminum (“ALclad”) , tempered a very specific way, a specific thickness). For aviation, this would have to have to come from a specific factory whose quality assurance was certified, with the required paperwork. A 4’x8′ sheet of this is around $100 wholesale.
Again, it’s a very specific item. I can’t just substitute 6061 or 7075 aluminum alloy, or T4 temperament for T3, etc even though they are all very similar in properties
There’s a handful of US companies that make what I’d need that make up most of the market. And a half dozen in China and a couple in India. If you go to a sheet metal distributor, the products are not in different piles based on country of origin. That would be impossible because they buy in bulk 8 months in advance for a commodity that is certified to a standard. It’s like having a grain silo with corn from last season from Kansas, Mexico, and Canada, and then later saying only the MX, and CA corn is now tariffed – and now somehow you think you could change just the price of the kernels that are not from Kansas.
Even though much of it is already US-sourced, there’s no way to simply re-source / separate the aviation aluminum market to 100% USA Origin in less than a year due to the logistics of the supply chain. The end result of the tariff is that the market price that everyone pays for aircraft aluminum simply increases by 25% immediately, even if your distributor happens to sell you 100% USA-sourced aluminum.
Most US steel plants produce low grade steel. Trump tariffs protect them. Only one or two produce top grade steel. Most top rate steel is imported. Top grade steel is a must to our national interest. Tariffs will encourage foreign and American steel co to produce it in the US. Low and mid grade steel will drop due to global overcapacity and deflating currencies.
Nippon gave up on US Steel. They will invest in the US instead of sneaking
cheap steel under US Steel banner. Higher steel prices will enable US Steel to invest in their aging plants, pay higher wages to highly skilled workers, pleasing United Steel Workers Union (USW) and pay higher dividends to X investors to CUT corp taxes. Tariffs and higher income taxes from 170,000 highly skilled workers will fill Trump’s gov coffer.
As far as aluminum: don’t cook with aluminum. It might cause plaques in your brain. F-150 might cost $50 higher and Boeing 787 $500 more.
JFK ganged on US Steel when they raise prices by 3%. US Steel caved in, before raising price by 4% to invest in plants and pay higher wages.
Senator Ribicoff and Ralph Nader destroyed GM and Detroit. DC might be the new Detroit.
A shame Congress has abdicated their responsibility to enact tariffs, but such is the environment of D.C. in recent years.
Interesting to go back over the years and survey tariff history. In relatively recent times, the Clinton administration sure was deleterious to the U.S. yet the illusion of having a budget surplus (thanks to Boomers being at peak earnings, small housing bubble, and the stock/internet bubble) at the end of it keeps the fable of sound economic policy and budgets alive.
Those are just some of the reasons I voted against Trump, but that’s what all of you wanted. These policies will make everything more expensive. Inflation will go higher for sure.
And the US will be stronger for it in the long run. We’ve had enough of people like you willing to sell us all out for ever more cheap disposable junk.
Not so cheap disposable junk is what Usonians will end up with as their cars indicate.
do you shop at wallmart? Do you have any appliances in your house? By your logic that is all cheap disposable junk. Just because China has 4x the manufacturing acumen of the us does not mean that these products americans love to buy are “junk”
iPhones are made in China.
I saw on Reddit that “Trump did this” stickers are going up all over the place next to higher prices of eggs, fuel, and other items.
“All US consumers of steel and aluminum will pay higher prices, especially the automakers.”
The pain won’t stop there. If cars become more expensive that means it will cost more to insure them (insurance). It will cost more to repair them (maintenance). And the taxation will be higher to acquire them (sales tax). The “car ownership” paradigm is about to get a whole lot more expensive and if you’ve designed your life around needing one, you’re gonna get feel the pain more. Gee who was warning about this for a while now? And this doesn’t include higher fuel prices yet either……
The added insurance, maintenance and tax cost will translate to lower spending elsewhere.
Got SPY PUTS?
Why can’t the USA domestically produce a modest, affordable car? My suspicion is automaker collusion, with no antitrust enforcement. Cars are radically and ridiculously overbuilt for the uses many of us have. I think this may be a scandal, I really wonder about corruption. Raising the price of one major input doesn’t seem to address this at all. Lina Khan was an FTC Chair with some grip on this sort of idea, perhaps not choosing the best targets, but anyway, she’s out. The rabble are going to find total evaporation of consumer protection (outside of sporadic, ad hoc, personalized idiosyncratic moves by Trump for short term crowd appeal), whatever we may think of its prior misapplication under the Dems.
Americans don’t want modest cars. The two most popular vehicles are F-150 and Chevy Trucks. The only time modest cars become popular is when high oil prices force consumers into them. That may be happening later this year with Trump’s trade war.
https://www.caranddriver.com/news/g60385784/bestselling-cars-2024/
It’s because everybody in the supply chain gets paid too much!
At this point the increase won’t be as substantial as the run-up from 2018/19 to today so are viewing it as the proverbial final piece of straw breaking the back of the camel?
Perhaps manufactures will find more ways to substitute cheap plastic for metal in new vehicles? Then again, there is always clay-
https://www.youtube.com/watch?v=F02P2JO7yfc
Or wood, like a kid’s hot rod.
Do a search on “mass timber”. This is a highly compressed wood that is being used in office building construction now in place of steel beaming.
Aluminum price is inelastic. Steel is more elastic.
I’ve got some aluminum scrap laying around in my yard. Going to wait a bit now before recycling it for the higher prices.