Trump Imposes Steel and Aluminum Import Tariffs, Effects on ECs Unclear

Published On
Mar 8, 2018

The political and economic talk these last few days, of course, has been the Trump Administration's statement that it will impose tariffs of 25 percent on U.S. imports of steel and 10 percent on aluminum.

Many in the political and business arenas, both domestically and internationally, are up in arms about the statement. For example, a number of nations from around the world are threatening to impose tariffs on their imports of U.S. goods, causing some observers to predict an escalating trade war that could destabilize the ever-growing U.S. and world economies.

Domestically, even some in the Republican party have expressed their displeasure with the plan. Some in Congress have threatened legislative pushback.

An article in the March 6 issue of the Wall Street Journal notes, "Congressional Republican leaders aren't ruling out potential legislative action aimed at blocking such tariffs, according to a Republican familiar with the matter."

As such, any discussion of specific results of such tariffs would be speculative. However, such discussions are taking place, and some of them include the impact on electrical contractors.

"At this point, we are still trying to determine what the tariffs would mean for our members," said Marco Giamberardino, executive director, government affairs, the National Electrical Contractors Association (NECA). "We are working with our contractors and other partners to figure out what the impact would be, and we are closely watching the situation."

Part of the impact would be on whether there would be escalator or de-escalator clauses in certain contracts.

In general, though, the tariff on aluminum would likely not have as much of an impact on electrical contractors as the tariff on steel. One probable impact of a steel tariff would specifically be on utility line contractors, who are typically the prime contractors on those jobs and are the ones that purchase the steel for transmission tower erections and related infrastructure.

Another possible concern for contractors in general is short-term shortages of steel, the result of people rushing out (even this week) to try to buy up orders and stockpile as much as they can. This could affect lead times for jobs that are coming up.

"We are in a 'wait and see' mode, and we are not quite sure what the ramifications would be," said Victor Salerno, CEO of O'Connell Electric Co. (Victor, N.Y.). "I am a supporter of manufacturing in this country as best as we can. However, when you start tampering with free markets, you don't know what the ramifications might be."

In the meantime, the company is hedging its bets a bit, operating under the assumption prices could increase a bit.

"However, I don't think it will get to the point where prices go up so much that suddenly projects aren't moving ahead," he said.

"I think this tariff discussion dovetails with the NAFTA negotiations and other ongoing trade negotiations," Giamberardino said. "We have found that the president throws such ideas out there in order to scare some of our trading partners as a way to possibly create a better negotiating position."

On Mar. 8, in two official proclamations, the president announced the tariffs on steel and aluminum. In the proclamation, Trump credited national security as the impetus for these tariffs and said any country willing to address those national security concerns could become exempt from the tariffs. Canada and Mexico are excluded as Trump continues to negotiate the terms of NAFTA.

The tariffs will take effect on Mar. 23.

(Editor's Note: This story has been updated to reflect its developing nature.)

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