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Goods facing higher prices than American metal tariffs


Natalie Sherman

Business Journalist, BBC News

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A new 25% tax will be imposed by imports of steel and aluminum in the US from countries, including Canada, Mexico, Brazil, as well as the European Union.

The new tariff measures announced by President Donald Trump will mean that US companies that want to bring metals to the country will have to pay more.

But there is a risk that companies will transfer additional costs or some part of it to consumers.

Because steel and aluminum are key components in many goods, which objects could become more expensive?

Canned food, beer and nasty drinks

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About 70% of steel used in the US to make food cans are today imported from countries such as Germany, the Netherlands and Canada, according to the Institute for CAN (CMI) manufacturers, a business group representing the CAN producers.

After Trump in 2018 ordered Tariffs on Celica, many CAN manufacturers won “exclusions” of these import taxes, due to the objection of steel manufacturers, given the limited production of steel species used to make cans in the US.

Since then, steel manufacturers have further reduced production, increasing prices, warning CMI, who sent a letter to Trump’s administration earlier this month, which signed large food companies, including General Mills, del Monte and Goya.

Robert Budway, President of the CMI, said that without exemption for the CAN producers for the import of steel tariffs, he will be priced with canned food made in the USA will probably increase.

“Although the president may believe that these tariffs are protecting the steel industry, they certainly undermine our food safety and our resistance to the supply of American canned food, to which Americans rely every day,” said Mr. Budway.

When it comes to aluminum, breweries and Fizzy drink manufacturers, such as Coca-Cola, they also warned that the move would add costs and could lead to higher prices for customers.

“We control enough variables that we can adjust and alleviate our path through what is happening,” Coca-Cola Executive Director James Quincey told investors this week.

Trump said this time there will be no exemption from the rules either for individual products or for certain countries, but some sectors hope to return from that position.

Cars

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After Trump imposed tariffs on steel and aluminum during his first term, car manufacturers, including Ford and General Motors, warned that measures would add about $ 1 billion to each of their costs.

For customers, Morningstar estimated that the tariff cost would then result in approximately 1%, or an increase in price of $ 300 for customers.

David Whiston, analyst from Morningstar, warned that Ford could face a similar increase in costs, but said it was not clear how consumers would influence.

Pressures of accessibility on the market where sales have not yet returned to the level of 2019 could limit how much the costs the companies decide to convey, according to Michael Wall, an Auto analyst at S&P Mobility.

But he said it was still “realistically” to expect some costs from the metal tariff to customers.

However, he noted that Trump’s announcement of Tariff on all goods imported from Canada and Mexico, which is currently on hold until March, will have a much greater impact on customers.

At a business conference, Ford CEO Jim Farley warned that Trump’s recent moves caused “a lot of costs and a lot of chaos” for his industry.

TD economists estimated that cars could increase the price by about $ 3,000 if the tariffs on the goods from Mexico and Canada entered into force.

Construction, housing and devices

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The construction industry as a sector is one of the largest steel users, which, to the developers of home builders, need for everyone, from the construction of the frame to the device.

Carl Harris, president of the National Association of Homes Builders, said that the decision on the name of Tariff Celik and Aluminum “was” completely opposed to “Trump’s stated goal that the housing is more affordable, warning that he would increase the costs and distract development and renewal.

“Finally, the consumers will pay these tariffs in the form of higher home prices,” he warned.

The National Association of Homes Builders invited the president to exclude construction materials from the proposed tariffs.

After Trump imposed steel tariffs in 2018, the Whirlpool manufacturer faced an unexpected jump in the amount of $ 350 million, he said he was stimulated by the jump price.

Companies that cannot absorb such costs would probably be transferred to them through higher prices in stores.



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