Industry Reacts to Aluminum, Steel Tariffs

The administration on Thursday enacted tariffs of 25 percent on steel imports and 10 percent on aluminum imports, however imports from Canada and Mexico were exempted from trade sanctions, which could lessen the tariffs’ effects on the door and window industry.

Canada is the number one supplier of both metals to the U.S. It represents about 41 percent of aluminum imports and 16 percent of steel imports.

Despite that major shift from the global tariffs that were announced last week, some in glass-related industries expressed concern about the move.

“The administration’s announcement of new tariffs on steel and aluminum imports threatens to drastically increase the prices of many building materials specified by architects,” said American Institute of Architects (AIA) president Carl Elefante, FAIA, and EVP/CEO Robert Ivy, FAIA, in a statement. “These metal products are some of the largest material inputs in the construction of buildings. Structural metal beams, window frames, mechanical systems and exterior cladding are largely derived from these important metals.”

Other groups said the tariffs could boost construction costs at a time when the segment is finally recovering from the Great Recession.

“Policies that increase the cost of development stand in the way of meeting urgent housing demand as well as imperil the economic and employment gains achieved through tax reform,” Cindy Chetti, senior vice president of government affairs at the National Multifamily Housing Council, told the Associated Press.

“It is frustrating to see the potential benefits of the president’s tax cuts and regulatory reforms being undermined by his short-sighted decision to impose tariffs,” said Stephen E. Sandherr, the CEO of the Associated General Contractors of America. “The best way to help the U.S. steel and aluminum sector is to continue pushing measures, like regulatory reform and new infrastructure funding, that will boost demand for their products.”

Greg Header, president of Solar Innovations, a maker of architectural glazing systems, said his company is monitoring the situation.

“We are obviously concerned, as it will impact both our costs and our customers’ costs,” he said. “It is our hope that a middle ground will be reached that benefits our country with the least amount of negative impact on employment and competitiveness. We intend to keep our customers informed as the situation unfolds.”

Other companies in the industry are also adopting a wait-and-see attitude.

“The devil is always in the details and that is certainly the case regarding the proposed aluminum import tariff,” said Steve Chen, the president of Crystal Windows. “Before the details are known, it would be premature to comment on the effect this will have on final window product pricing.”

Michael Collins, an investment banker and partner with Building Industry Advisors in Chicago, said tariffs could harm door and window companies.

“In the short term, this tariff will hurt door and window manufacturers by driving up prices of key materials,” he said. “It is to be hoped that in the long run, though, it will bring other nations to the bargaining table to avoid the more permanent negative outcomes of unchecked dumping.”

On the other hand, one industry veteran said he didn’t think tariffs on aluminum would have a major impact on the door and window industry.

“The commodity sourcing of primary aluminum billet (from which many manufacturers’ window frames are fabricated) where this new tariff will be levied is very far up the production stream,” said Bob Nyman of Livingston Marketing, a fenestration industry consultant. “Numerous other materials, components, labor inputs and other value-added steps are required before a finished window is produced. A 10-percent tariff on aluminum at the commodity level will likely trickle down to have a relatively minor impact on a finished window’s costs.”

Collins said in general tariffs harm trade, but sometimes they’re perceived as necessary to counter the kind of unfair dumping policies that countries such as China have been following for many years.

“From a free-trade perspective, tariffs are a hindrance and allow domestic producers of a good to be less efficient than overseas producers and still come to market at the same final price,” he said. “In the case of aluminum and steel, though, other nations have been guilty of dumping. This is the intentional pricing of a commodity below its fundamental value for the purpose of driving other producers of that commodity out of business. After that, the cheaper producer has a monopoly and can raise prices. China plays a very long game and is more than comfortable with such practices.”

The Aluminum Extruders Council (AEC) urged President Trump to target China specifically.

“We believe the president should focus on China, and we’re unconvinced that these tariffs do a sufficient job,” said AEC president Jeff Henderson. “As far as curtainwall, storefront and doors and window, I think we’ll be putting companies at a disadvantage by denying them access to global prices of aluminum.”

The AEC said the global tariff could actually benefit China in the long run, because the country does not export primary aluminum to the U.S. but instead targets downstream aluminum markets with their unfair trade practices.

“We simply cannot afford to get this wrong,” said Henderson. “The remedy should be a tariff targeted at China and countries that allow Chinese transshipment.”

Since 2009, the AEC has successfully battled what it calls the “unfair and illegal trade practices of the Chinese aluminum extrusion industry.” The AEC said its government lobbying actions targeting China have helped the U.S. aluminum extrusion industry increase employment by 50 percent during that time.

Article I of U.S. Constitution says only Congress has the power to set tariffs. However, Trump is using Section 232 of the Trade Expansion Act to impose this set of tariffs. It’s a law passed in 1962 that allows tariffs to be imposed by the president when imports are deemed to be damaging to U.S. national security.

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