Monthly index will compare American and foreign prices
Washington, D.C. – Business Forward, Inc. announced today its American Steel Index. The monthly report will compare the prices American manufacturers and their foreign competitors pay for hot- and cold-rolled steel.
The national business organization created the index to track the impact of new tariffs the Trump Administration has threatened or imposed on steel, aluminum, autos, and other goods. The charts below show how American steel prices compare to prices in the UK, Italy, China, Germany, and Japan.
“Economists have warned that tariffs could hurt American manufacturers,” explained Jim Doyle, President of Business Forward. “Unfortunately, they already are. Prices began rising when Trump started threatening tariffs eleven months ago. To hedge tariff risk, U.S. manufacturers began stockpiling steel, which increased prices 7 percent over seven months. As tariffs began taking effect, prices rose another 18 percent.”
The Steel Index also demonstrates that rising prices in the U.S. are only half the problem: American tariffs also lower prices foreign competitors pay.
“When American buyers are walled off, surplus steel flows to Europe, Asia, Canada, Mexico and South America, driving prices there down,” said Doyle. “Since February, our prices rose 18 percent, while prices in China dropped 3 percent. If you’re valuing the competitive disadvantage for U.S. manufacturers, it’s 21 percent, not 18 percent.”
Trump officials have argued that steel tariffs won’t hurt manufacturers or consumers because they add just $175 to the cost of a $35,000 car. Industry estimates the cost will be about twice that much (from $300 to $400).
“To understand how bad this could be, you need to compare the cost difference with profit margins, not sales prices,” said Doyle. An increase of $350 is a little more than one percent of the purchase price of the typical car sold in the U.S., but the profit margin on that car is four to six percent. “These tariffs could wipe out as much as a quarter of automakers’ profits. Worse, higher steel costs will have a bigger impact on the cost and profitability of less expensive cars. Working class families will be hit harder than higher income families.”
ABOUT BUSINESS FORWARD
Business Forward is making it easier for more than 100,000 business leaders from across America to advise Washington on how to create jobs and accelerate our economy. Business Forward is active in over 125 cities and works with more than 600 mayors, governors, members of Congress, and senior Administration officials.
Business leaders who have participated in our briefings have seen their suggestions implemented in the Affordable Care Act, the JOBS Act, the Clean Power Plan, the Toxic Substances Control Act, three trade agreements, and the President’s budgets. Many have also shared their recommendations with their representatives in Congress and through phone calls, op-eds, and interviews with local media. Ninety-eight out of 100 business leaders who have participated in a Business Forward briefing would be interested in participating in another one.
CONTACT: Elizabeth Kerr