American farmers and machinery manufacturers are bracing for higher prices if steel and aluminum tariffs are slapped on products from Canada and other U.S. trading partners.
It might be good news for U.S. steel producers, but big users of big iron are worried.
“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,” Vernon Schmidt, executive vice-president of the Farm Equipment Manufacturers Association, said in a statement.
“It’s hard to think of a worse time to drive up the cost of equipment purchases for farmers and ranchers.”
U.S. President Donald Trump’s threat to impose a 25 percent tariff on imported steel and 10 percent on aluminum was being taken seriously within and outside the U.S.
Within a day of Trump’s March 1 announcement of the tariffs, some steel product buyers were being warned by manufacturers that they would likely face higher prices soon.
The situation has alarmed the American Farm Bureau Federation, which was anxiously awaiting details on exactly how the tariffs would be imposed.
“We are still evaluating and waiting for details,” said AFB’s William Rodger in an March 5 email.
“We’ve heard a few general statements but want to know more.”
The main victim of U.S. tariffs is likely to be the Canadian steel industry, the biggest supplier to the U.S.
Canadian farmers could suffer too, since most farms rely on U.S. manufacturers for their biggest and costliest equipment: combines and tractors.
Increased costs are expected by almost all economists and observers because the purpose of raising the price of foreign metal is to create an incentive for American users to buy American product instead. That will give American manufacturers more pricing power.
“It’s hard not to see the tariffs continuing to push steel prices up,” said Schmidt.
“The domestic mills and those few not handcuffed by the tariffs will certainly take advantage of the situation.”
Canadian manufacturers might be helped by the U.S. tariffs, some speculate. If domestic steel isn’t flowing into the U.S., a glut on the Canadian side could drop prices.