How President Trump’s Tariffs Could Impact the Die Casting Industry?

When President Trump slapped 25% tariffs on foreign steel in March 2018, panicky U.S. buyers rushed to place new orders ahead of feared supply interruptions, driving prices up sharply. It was an instant bonanza for domestic steel producers. With much fanfare, some announced ambitious expansion plans. United States Steel Corp. even fired up a pair of long-idled blast furnaces in Granite City, Ill., and Trump seized the occasion to deliver a rousing speech at the plant about the industry’s resurgence.

What a difference a year had made. Benchmark steel prices had fallen well below their level before the tariffs took effect and were about half their peak in July 2018. The industry had responded with production cutbacks.

The import of steel and aluminum has long been a concern for American manufacturers. According to data from the Ministry of Commerce, 10 steel melting furnaces have been closed since 2000, and 8 aluminum smelters have closed or reduced their operations since 2015. The President's decision to impose tariffs on steel and aluminum on Canada, Mexico and Europe came before this. It landed in China in early March 2018.

What Is the Industry Response to the Tariffs?

The American Iron and Steel Institute praised the president’s move, but the Aluminum Association warned that not all the aluminum needed by American producers can be produced in the United States. This has also caused concern in other areas. Even if American aluminum and steel production increases, it cannot be increased enough to replace all the aluminum and steel imported by American manufacturers.

The organization, which represents American aluminum producers and users, added that tariffs should be directed at China, not American allies. So how will this affect industries like ours, which rely heavily on materials that President Trump imposes tariffs?

Which Industries Are Most Affected by the Tariffs?

Before the tariffs were imposed, about 90% of the 5.5 million tons of aluminum used by American companies were imported. Now that tariffs have been imposed, which industries will be most affected by aluminum?

The aerospace industry employs approximately 2.5 million Americans. Since manufacturing individual parts will undoubtedly increase costs, the Aerospace Industry Association predicts that tariffs may affect the industry’s global competitiveness.

The US Automobile Policy Committee is also concerned about the unintended consequences of tariffs and said that this may put the US auto industry at a competitive disadvantage in the global market.

The manufacturing and construction industries have created 17 million jobs in the United States, including die casting. The increased cost will affect everything from refrigerators to beer cans. The result may be that more goods are produced outside the United States, which means fewer Americans will be employed to produce these goods.

How New Tariffs Will Impact Die Casting Companies?

There is no doubt that the tariffs imposed on aluminum by Canada, Mexico and the European Union will have a direct impact on the die casting industry. As we pointed out, although American aluminum producers believe that they can increase production to a certain extent, they believe that their production cannot meet all domestic aluminum demand.

This means that the cost of aluminum die castings will rise. Traditionally, the cost of aluminum casting is lower than the cost of using other metals. These new tariffs may change this equation. They may also mean that the order will take longer to fill, because the aluminum required for die casting process may not be as easily available as in the past.

Some manufacturers have warned that they will need to find more cost-conscious die casting alternatives. Tariffs are expected to have a significant impact on downstream manufacturers, including rising aluminum prices.

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