The vessel, carrying aluminium for window frames and semi-truck parts, was supposed to make subsequent stops in Mobile, Alabama and Houston, but given US tariffs set to commence the next day, the logistics provider’s client canceled the remaining destinations.
This is the kind of disruption that has been replicated across the country as US President Donald Trump’s steel and aluminium tariffs played out. From the Florida coast to America’s heartland, ripples materialised with broad-reaching impacts on automakers, builders and consumers.
At 12:01 a.m. Wednesday US Customs and Border Protection began collecting the 25% import duty on all raw steel and aluminium as well as on products. Trying to beat the tariffs clock, the Tampa Bay shippers realized it would be cheaper to deliver the Indian aluminium via expensive flatbed trucks to the other destinations than to pay duties the next day, said Jose Severin, a business development manager for Mercury Resources, the logistics provider.
“One particular client had a vessel making three stops in the states and had to drop everything on the first one because they wouldn’t have gotten to step number two before the tariffs,” Severin said. “It’s really disruptive.”
BloombergSince Trump’s inauguration the cost to buy US-produced steel has surged to the highest in more than a year. American aluminium consumers are ponying up rising shipping charges that Ford Motor Co. has warned could “blow a hole” through their industry. Two of the US’s biggest import sources, Canada and Mexico, are threatening broad retaliation that will only further roil unified supply chains built over decades and rebuilt in recent years to benefit North American industries.
Canada-based Algoma Steel Group Inc. is one critical steel provider to the US that didn’t waste time responding to tariffs. After five hours of mayhem in which Trump unexpectedly announced and then walked back a doubling of Canadian metal tariffs, Chief Executive Officer Michael Garcia said his trucks stopped rolling across the border just before the deadline, putting a pause on shipments while awaiting a reprieve.
Much of the Canadian metal that crosses the border is destined for Detroit, according to Dan DeMare, director of sales at Heidtman Steel Products Inc. He said his team had been trying to get as many shipments as possible from the northern neighbour “under the gun.”
DeMare said once foreign metal enters the US, companies like his have to pay the 25% tariff. Then his company sells the raw material to an equipment manufacturer, who will turn that steel into car parts. In both steps, the previous seller passes through the tariff burden downstream. The part made with the metal finally gets purchased by companies like Ford, DeMare said, who end up paying the tariff fee.
“Ford isn’t going to disrupt a supply chain that took them years to build to avoid that tariff,” DeMare said. “They’re just going to eat that tariff on the final component that goes into the car, which ultimately gets handed down to the consumer of a car.”
BloombergTrump’s stated intention of the tariffs — to help US manufacturers — appears to be working if Heidtman is any indication. DeMare said as of Wednesday morning, his company started buying only from US producers to avoid tariffs.
US steelmakers are coming off their worst year since Trump’s first term in office as lacklustre construction demand, inflation and high borrowing costs created a triple whammy on earnings. Domestic steel prices are up more than 30% this year — which will flow directly into steelmaker coffers — and the only remaining pure-play American aluminium producer, Century Aluminium Co., is up 6.5% this year.
With steel capacity utilisation at just 75% and two aluminium smelters having been idled since the pandemic, analysts say there’s plenty of capacity to ramp up among American metal manufacturers to offset a drop in imports scared off by tariffs. This is exactly what Trump seems to want.
Key trade allies, however, remain frustrated. Brazil, the second largest steel import source, warned tariffs will detour shipments to other countries. Aco Brasil, the nation’s steel industry group, said the American duties send out a warning to countries that have been suffering from a flood of cheap metal imports. China is by far the world’s most dominant steel producer, whose exports last year surged close to a record.
The concern over tariffs is that excess supply from China and elsewhere will be rerouted to other markets where demand remains stagnant compared to the American market. South Korea, Vietnam and the European Union already are raising their barricades.
“Nobody wins trade wars, unfortunately,” DeMare said. “Consumers end up being the losers.”
