While we understand the president’s desire to protect the nation's vital steel industry, our first concern is how the promised steel tariffs would be implemented, and it does not look like those details will be available until next week at the earliest.
It’s hard not to see the tariffs continuing to push steel prices up. The domestics mills and those few not handcuffed by the tariffs will certainly take advantage of the situation. From what we read, the administration seems intent on rolling all steel products together, even though there are many steel products imported that are not made in the U.S.
With equipment dealers’ holding very limited implement inventory, higher steel costs are likely to make their way through the distribution network quicker than some end users would expect. It’s hard to think of a worse time to drive up the cost of equipment purchases for farmers and ranchers, but manufacturers will likely be forced to pass cost increases on very quickly.
Depending on how the tariffs are implemented, this action could encourage overseas’ interests to replace raw materials imports into the U.S. with finished parts or skip that step and push finished products into our markets, avoiding the tariffs altogether. This would leave U.S. manufacturers at a price disadvantage while rolling out the welcome mat for overseas manufacturers to flood our markets with finished goods, untouched by tariffs.
How important is this to our members? One of our members recently told me, "Steel is where we all live. . . kind of like a sugar tariff if you are making candy." As critical as steel is to our industry, should history repeat itself and ag commodities prove an easy target for retaliation, disregard all of the above concerns and follow instructions below.
In Case of Emergency Break Glass ... and pray the box contains better plans and options than the last time the industry was in the same position.