“My business is booming,” said one of our clients in the steel and metal industry. Another commented that “my business is through the roof!” We weren’t sure why until we asked, “What’s the big deal?”
It appears that steel and aluminum manufacturers, producers and distributors are enjoying a boost in revenues thanks to the tariffs on imported steel and aluminum that Trump is imposing. As a result, many of the companies that rely on metals affected by these tariffs aren’t sure what will happen, so they are stocking up on raw materials, parts and components.
The new tariffs will impose a 25 percent price increase on steel imports and 10 percent on aluminum to protect national economic security, effective March 23. The plan has been widely criticized by government officials and corporate America who feel the tariffs will cost U.S. jobs, raise consumer prices and hit American manufacturers.
Other countries are threatening trade wars. The EU has warned it will impose a 25 percent tariff on the $3.5 billion of American goods that it imports. Trump’s next move is to impose tariffs on up to $60 million of Chinese imports of technology, telecommunications and apparel.
Many businesses feel that a cost increase is on the way and will likely be pushed down through the supply chain to other businesses like beverages and automobiles. Some US companies that use steel and aluminum in their products may reduce production in the US in favor of foreign production where they can avoid cost increases. Other policymakers think that US manufacturers will no longer have to compete with foreign materials and can instead charge higher prices.
Since many aren’t sure what will really happen as a result of the tariffs, they are building up inventory levels, buying raw materials and stocking up on parts to keep ahead of price increases or lack of materials.
Instead of worrying about stocking up on inventory, Kuebix believes that a greater focus on reducing supply chain costs is needed. As transportation is one of the biggest expenses for a company, often up to 40%, ways to lower logistics costs while boosting efficiencies are a must in this uncertain economic environment.
By leveraging Kuebix TMS, retailers and manufacturers can quickly and easily receive better rates for any transportation mode. Our free TMS, Kuebix Shipper, can even be up-and-running the same day, so companies can immediately begin offsetting costs by receiving lower rates. And by upgrading to add modular features to optimize routes and consolidate loads from LTL to FTL where possible, companies can cut down on the total cost of goods and put money back into other needs, such as raw material purchasing.
Logistics professionals uncertain about the future of steel and aluminum imports can improve their companies’ outlook by utilizing technology to cut costs.