Published 1:41 am Wednesday, March 21, 2018
Agricultural steel users are already seeing higher prices due to President Donald Trump’s proposed 25 percent tariff on imports.
Mark De Kleine, an agricultural engineering consultant in Prosser, Wash., said he found big price jumps in just a few days when sourcing trellis wire for orchards.
“A 25 percent increase in steel — that’s going to be passed down to the consumer and be difficult for the ag industry. There’s a lot of steel in one acre of trellis,” De Kleine said.
Bud McIntyre, manager of Moses Lake Steel Supply in Moses Lake, Wash., said he’s seen 20 percent hikes but that increases are “all over the board because not everyone is going at the same time and rate.”
Inventory and type of steel also factors into the price. Coil, tubing and pipe, most of which are imported, are increasing the most, he said.
“Steel that was $40 per hundredweight a month ago is in the mid-$50s now,” he said.
Trump announced a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports on March 8, effective March 23, with exemptions for Mexico and Canada. The action was recommended in a U.S. Department of Commerce study, released Jan. 11, that steel imports are “weakening” the U.S. economy and threaten “to impair national security.”
Foreign competition has reduced U.S. steel production and tariffs should reduce imports to a level that will enable U.S. steel mills to operate at 80 percent or more of their rated production capacity, Commerce Secretary Wilbur Ross concluded.
Since 2000, foreign competition and displacement of domestic steel by “excessive imports” have resulted in the closure or idling of 10 basic oxygen furnace facilities, the study said. That’s a 50 percent reduction and a 35 percent decrease in steel industry employment and caused the industry to operate on average with negative net income since 2009, the study said.
Previously, Presidents George W. Bush, Bill Clinton, George H.W. Bush, Ronald Reagan, Jimmy Carter and Richard Nixon all used quotas or tariffs on steel imports at less than the current import penetration level, which is greater than 30 percent, the study said. Clinton and Reagan each did so three times, Carter twice.
“Hopefully, this (tariff) will spark some ability for the U.S. to produce more steel,” McIntyre said. “Yes, it will be painful for awhile but if we can stay the course in the long run it will be beneficial.”
Moses Lake Steel Supply is a fairly small steel distributor and owns Columbia River Steel Supply in East Wenatchee. The company buys mostly domestic steel, with some from Nucor Steel plants in Seattle and Utah.
“They have taken some price increases on angle iron, flat bar and channel material but not nearly as bad as tubing and piping,” McIntyre said of Nucor.
Some companies are using the situation as “an opportunity to make money,” but steel producers and processors are mostly basing prices on what they figure their replacement cost of the material will be, he said.
Price increases will be seen on steel fence posts, barbed wire, components of tree fruit packing lines — “anything made out of steel,” he said.
Steve Case, purchasing agent for Wilson Orchard and Vineyard Supply, Yakima, said he buys some stakes, wire and steel posts from Canada, which is exempt.
“I’ve seen prices on certain items go up 25 percent in the last six months,” he said.
