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Trump’s Steel Tariffs and the Gas Industry

Industry News / Insights

President Trump’s tariffs on steel and aluminum officially went into effect on June 1, 2018. The implications of these tariffs mean that there will be a 25% increase on steel, and a 10% increase on aluminum imported from Canada, Mexico, the European Union and other countries that participate in this trade industry with the United States.

The United States is the largest importer of steel, and acquires three-quarters of its imported steel from the following eight countries: Canada, Brazil, South Korea, Mexico, Russia, Turkey, Japan and Taiwan. Only 3% of steel is imported from China, while half of imported aluminum comes directly from Canada. Many are worried that these countries will retaliate with tariffs of their own on US imported goods.

By making imports more expensive, the purpose of these tariffs is for companies to purchase steel and aluminum domestically in hopes of increasing business for American steel manufacturers. However, the US steel industry has largely focused on manufacturing steel for automobiles, appliances and construction. Certain industries, such as the oil and gas industry, require specific grades of steel that are durable enough to weather corrosion and undergo the pressure of off shore drilling. Pipeline-grade steel makes up only 3% of the total US steel market, which is why the tariff is a huge cause for concern in this specific industry.

Despite the intention of this goal, companies who choose to switch to a US steel manufacturer will still have a costly transition period. Either way, consumers of steel and aluminum will have to adjust their budgets to accommodate the inflation costs imposed by the new tariffs.

Food packagers, beverage companies, automakers, oil and gas, farm equipment and appliance manufacturers will be among some of the businesses affected as the price of their goods are expected to rise.

How might these tariffs affect the gas industry?

The steel and aluminum industries also fuel much of the gas industry. The atmospheric gas industry serves the medical, energy, cultivation, oil and gas, and food and beverage industries – most of which require steel and aluminum throughout their applications. Whether it’s purchasing a bulk tank or cylinder made out of steel alloys or aluminum, or purchasing a gas to weld these metals, market costs are rising across the board. These increases include price adjustments, especially on the production of tanks and cylinders. This is in response to increasing operation and delivery costs caused by lower operating rates in the steel market.

As a direct result of the tariffs, don’t be surprised if you see a slight increase in the price of your industrial gases to accommodate the costs of inflation. As our promise to deliver flawless dependability to our customers, Rocky Mountain Air will do our best to inform you of any increased costs on our products. Contact your local branch in any one of our five states today if you have any questions regarding the tariffs and their direct affects.

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