The list of countries affected by President Donald Trump’s newly enacted tariffs on steel and aluminum imports has not yet been finalized.

But the impact of a 25 percent surcharge on steel and a 10 percent surcharge on aluminum already is starting to mount as domestic suppliers, contractors and manufacturers try to get a handle on the new policy, which was signed into law only a few weeks ago. Some observers say the tariffs are good for domestic steel producers, while others say the surcharges have only served to increase prices of consumables.

“Everybody in the steel industry is going, ‘Yes, it’s about time somebody is stepping up to the plate,” said Cindy Stott, owner of C & L Metal Sales, a Northeast Portland firm specializing in structural steel material and decorative items.

The new tariffs have not had the impact on prices of raw materials some are suggesting, Stott said. Instead, she said this is just the latest step in a saga dating back to the run-up to the 2008 Olympic Games in Beijing, China. It was then, she said, that Chinese steel manufacturers ramping up to produce materials needed for the games started selling excessive quantities overseas. Even worse, much of that steel, she said, was inferior in quality.

“They were trying to build fast enough, and not producing the correct materials,” Stott said. “They were keeping the elite stuff and they were selling the rest.”

China is by far the largest manufacturer of steel in the world. As China goes, the industry follows. And Chinese steel and aluminum are entering the U.S. at such a scale that they constitute a threat to national security, according to a Feb. 16 report released by U.S. Commerce Secretary Wilbur Ross under auspices of Section 232 of the Trade Expansion Act of 1962.

Among the key findings of the Commerce Department’s investigation were that the U.S. is the world’s largest importer of steel and that it produces just one-quarter as much as it imports. Also, steel employment in the U.S. has fallen by 35 percent since 2000, according to the report. Meanwhile, world steelmaking capacity is up 127 percent from 2000, while demand for steel has slowed during the same period.

It’s a confusing market, and to some industry professionals, the latest tariffs have only succeeded in complicating their business.

“There has definitely been an impact on pricing,” said Abe Villarreal, longtime general manager at Eastside Steel in Portland. “It took effect more on the discussion of enacting (Section) 232, rather than the actual signature on paper. But we saw significant increases in the first quarter, rather than more recently. On light sheet metal goods and light tubing that is rolled, there has been in neighborhood of 20 percent increase. On heavy structural it’s been more in the nine to 13 percent range.”

As a fabricator, Eastside Steel produces a wide range of products for end users in the Portland area and further afield. As such, Villarreal said, the company already sets quality standards for raw materials that have allowed it to avoid the troubles described by Stott.

“As far as quality and dumping, maybe that’s been the case from a manufacturer’s point of view,” he said. “But in my personal world, we buy and sell raw steel product to manufacturers and we have very little issue with quality from oversea.”

Villarreal added that the large majority of raw steel purchased by his company is actually produced domestically.

“The mainstream media would lead the consumer to believe that we don’t roll steel in America anymore,” he said. “But most of what I see every year is American made.”

Despite that, Pat Prentice, general manager of The Lynch Company, a Southeast Portland steel fabricator, said the issue isn’t where the steel is produced but how much of it and at what cost.

“I think what’s worse than the price increases,” he said, “which is going to end up costing the consumers, not me, is that the availability isn’t there. The mills are now wagging the dog. They’re dictating when they roll different materials, so when there are critical jobs coming up and loans from the bank and crews are set up you can’t find the material you need.”

Prentice said he wished the Commerce Department planned better for these types of circumstances, which have happened before and are likely to happen again.

“The biggest problem is when you do something like put a tariff in place, it’s important to plan and not just have a knee-jerk reaction,” he said. “And I think the plan should have started off speaking with domestic mills and saying ‘Hey, if you hold your domestic prices down while we put tariffs on, we’re more competitive. But that didn’t take place. Instead, domestic mills raised their prices 25 and 10 and it didn’t change anything. Nobody benefited. All it was was a mandated price hike.”

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President Donald Trump’s newly introduced tariffs on steel and aluminum imports have stirred up debate across the country since they were signed into law.

Steel manufacturers are virtually alone in voicing support for the new 25 percent charge on foreign steel and 10 percent on foreign aluminum. American manufacturing and construction firms have largely rebuffed the policy, which they say will reduce demand for projects and ultimately result in job losses. Trump, however, is merely the latest in a long line of American presidents who have used tariffs to protect the domestic steel industry. Previously, George W. Bush imposed a 30 percent tariff on steel in 2002.

Many Pacific Northwest construction professionals oppose the tariffs. Industry figures say the move to tax steel and aluminum only adds to existing cost uncertainties in commercial and residential building.

“It introduces a level of uncertainty into the market,” Hoffman Construction Vice President Daniel Drinkward said. “The construction market is seeing tremendous cost uncertainties even without this. We have a labor shortage that affects our subcontractors’ ability to deliver work, and to pile this on top of it, it certainly doesn’t help.”

The tariffs were signed into law March 8, but until May 1 (pending discussions) for Argentina, Australia, Brazil, Canada, Mexico, South Korea and the member countries of the European Union. This is noteworthy, because Canada is currently the United States’ largest trading partner for steel products.

“The question is: How much will that actually impact the cost of steel?” Drinkward said of the new tariff. “Certainly, some of that capacity will get picked up by domestic steel manufacturers. And it’s also uncertain how much any reduced demand will affect prices.”

Such is the uncertainty, however, that some contractors are not yet allowing themselves to worry about the unknown.

“We haven’t seen any major concerns yet from any of the major suppliers,” INLINE Commercial Construction Vice President Brandon Flint said. “And until we start seeing that, for right now we’re just doing everything business as normal. We’ve talked about it, but at the same time, how fast will it turn around? It’s yet to be determined.”

For builders, the new tariffs follow the imposition last year of an approximately 21 percent tariff on Canadian softwood imports. The latter move has already hit both residential and commercial builders. Now with the former in place, contractors are having trouble predicting where the market is heading.

“Because they’re passing it straight through to the end consumer, unfortunately we don’t have the ability to absorb that, so it keeps building,” said Mack Thames, a senior project manager with TEAM Construction of Vancouver, Washington. “You’re just raising prices.”

Thames noted that lumber prices have been impacted by not only the tariff on Canadian softwood, but also by last year’s raging wildfire season that saw a reduction in harvests and imports alike.

Overall, materials have increased in cost by 5.2 percent from February 2017, performed by the Associated Builders and Contractors. It stated softwood lumber prices went up 5.6 percent while steel mill product prices increased by 2.3 percent.

“There are a lot of materials in construction that are commodity-based,” Thames said as he looked out across the Southeast Portland project site where his firm is building the $29.9 million Stark Street Apartments. “So my fear is that I’m already starting to see some projects shelved and put on hold, and my fear is that this continues.”

The Associated General Contractors’ Oregon-Columbia chapter declined to comment on the tariffs, but the national organization agrees with Thames.

AGC of America CEO Stephen Sandherr stated March 8 the new steel and aluminum tariffs will “cause significant harm to the nation’s construction industry,” and possibly trigger as many as 30,000 job losses. He also pointed out that companies currently engaged in fixed-price contracts will have to eat any supply cost increases, while contractors in general also will be forced to deal with a likely decrease in demand for private projects.

“The bottom line is that any short-term gains for the domestic steel and aluminum industries will likely be offset,” Sandherr said.

One of the few voices in favor of Trump’s tariffs is the U.S. steel industry. United Steelworkers officials released a glowing statement in support of the move the same day opponents expressed their displeasure.

“Adequate production and trained workers go hand in hand,” USW International Vice President Tom Conway stated March 8. “The announced relief has already sent a positive charge through the industry that the decline in steel and aluminum sectors can be reversed.”

Others, including Drinkward, aren’t so sure.

“It’s not certain to me exactly how big an impact this will have,” he said. “But it will put upward pressure on the cost of steel, and there’s just no way around it; you’re making steel harder to provide.”

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