Global Steel Outlook: Q2 2018 Tariff Fallout

usa vs china

Here we are—already through the first quarter of 2018, the tariffs on Chinese steel & aluminum signed and the retaliatory actions are starting to come to light. Even though the tariffs were  more broadly applied to various points of origin initially—certain key allies and trade partners have been made exempt (albeit in some cases temporarily) -leaving China as the prime focus and recipient. Not unexpectedly, China has threatened tariffs against the United States, but also has filed a complaint with the world Trade Organization (WTO) -seeking 60 days of consultations to talk through grievances and negotiate a compromise. The looming question is exactly how much the Trump administration or Chinese delegation are willing to truly compromise.

In the middle of this tense stand-off are the hardworking manufacturers of America and those who supply (directly or indirectly) their production. Prices of steel and aluminum materials have already increased and it’s forecast that supplies will continue to tighten as the countries negotiate through their differences. In the interim—the smaller manufacturers will be amongst the first to suffer the brunt of the changes with lower margins and little room to argue for price increases or adjustment of bids and contracts. Bear in mind all of the other “support industry” affected by these manufacturers or regions and the impact can be magnified further.

Other, unforeseen or unacknowledged factors can also contribute to the urgency of resolving these trade issues. Other commodities like chemicals used in production and finishing processes are also experiencing issues with availability and price increases. These materials are often overlooked, but play very significant rolls in maintaining smooth and profitable production.

Many eyes and ears will anxiously await any word of resolution. In the interim—the “always resourceful”, smaller manufacturer will need to trim and optimize wherever possible to remain viable. In times like these, the relationships of one’s suppliers need to more tightly align with those of the manufacturer—maximizing efficiencies and optimizing chemical consumption. As a decades-long driver and champion of minimum quantity lubrication (MQL), IRMCO has the experience and technology to help you keep control of your production costs and quality. To learn more about the “IRMCO WAY” and our commitment to our customer partnerships—give us a call or visit our website. We’re here to help— because we’re all in this together.




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