March 17, 2018 DPR

Section 232 Tariffs Imperils US Economy

Section 232 tariffs will break metal supply chain

Section 232 Tariffs Imperils US Economy By Disrupting Supply Chain

The Section 232 tariffs to be implemented by the United States threatens not only the engine of the world economy, the US, but also the one under your hood.

A513 Supply Chain Seriously Interrupted

The supply chain today for cold-drawn mechanical tubing A513 (Type 5, 6) has been seriously interrupted by a substantial reduction in imports. That supply squeeze has resulted in dramatically increased lead times – at least four to five months – and some mills are quoting as far out as October shipments.

Prices are also up, having gained 15% since the fourth quarter of 2017, and are expected to rise another 10-15% in the second quarter of this year; and that’s before you take into account price increases of 5% or more announced by US tube mills.

Tight Supplies And Higher Prices

Tight supplies and higher prices are the results of a trade case targeting unfairly traded imports of cold-drawn mechanical tubing. A final determination in that trade action is expected to be published on Tuesday, April 3.

If US trade officials find in favor of domestic producers, tariffs ranging from 5-187% will be imposed on imports. So we already have a big supply chain disruption in the works and now another 25% is due to be slapped on top of that due to the Section 232 tariff, further unsettling the market.

Punishing Fairly Traded Suppliers Will Hurt Economy

Dealing with unfairly traded imports through anti-dumping and countervailing duty actions is something the industry is used to, but punishing offshore producers who supply fairly traded product with a 25% tariff is counter to the principles of free trade that have brought prosperity to the US and the rest of the world.

Metal Suppliers Will Be Adversely Affected

Our company has been importing cold-drawn mechanical steel tubing into the US since the early 1960s in service of the distributor and fabricator markets. Welded cold-drawn mechanical tubes are used to make precision parts for the automotive, machinery, agricultural and construction equipment markets. A majority of the tubes under the hood of your car are cold-drawn steel tubes.

Karay Metals, Inc.
(845) 679-3385

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