Steel and Aluminium Tariffs May Affect the Cost of Canned Food, Cars, and Housing
A new set of tariffs on steel and aluminium imports, announced by President Donald Trump, is set to take effect next month. These tariffs, which will impose a 25% tax on all steel and aluminium entering the United States, mark the end of exemptions that had previously applied to imports from countries like Canada, Mexico, Brazil, and the European Union. While intended to protect the domestic steel and aluminium industries, this policy shift could lead to higher prices for American consumers, as businesses may pass on the additional costs to customers.
The tariffs are expected to affect various industries where steel and aluminium are key materials. What are the goods likely to experience price hikes due to these new tariffs?
1. Canned Food, Beer, and Soft Drinks
The food and beverage industries, particularly manufacturers of canned goods and drinks, are set to be impacted. About 70% of the steel used in the US for food cans is imported, with sources including Germany, the Netherlands, and Canada. The Can Manufacturers Institute (CMI) has raised concerns, noting that, following the 2018 tariffs, US steelmakers reduced production, leading to higher prices. Without exemptions for can manufacturers, grocery prices for canned food could rise, warns Robert Budway, president of the CMI. Companies like General Mills, Del Monte, and Goya have expressed concern over the escalating costs, which could affect American consumers’ access to affordable canned goods. In addition, soft drink producers like Coca-Cola are expecting the aluminium tariffs to drive up production costs, likely resulting in higher prices for customers.
2. Cars
The automotive industry could face significant price increases as a result of the new tariffs. In Trump’s first term, car manufacturers, including Ford and General Motors, warned that steel and aluminium tariffs would add roughly $1 billion to their costs, leading to potential price increases of around 1% or $300 per vehicle. This time, analysts are predicting a similar outcome. However, affordability challenges in the car market could limit the extent to which automakers pass on these costs to consumers. According to Michael Wall of S&P Mobility, it’s still realistic to expect some price increases. Notably, the broader impact of Trump’s proposed tariffs on goods from Mexico and Canada could drive up car prices by approximately $3,000 if the tariffs go into effect. Ford CEO Jim Farley expressed concerns at a business conference, highlighting the “chaos” the tariffs are causing for the automotive sector.
3. Construction, Housing, and Appliances
The construction and housing sectors, major users of steel, are likely to see increased costs as well. Steel is essential for everything from building frames to household appliances. Carl Harris, chairman of the National Association of Home Builders, warned that the tariffs could exacerbate the issue of housing affordability, pushing up the cost of construction and limiting development. Similarly, appliance manufacturers like Whirlpool, who faced a $350 million increase in costs in 2018 due to steel tariffs, are expected to raise their prices once again. The National Association of Home Builders has urged the president to exempt building materials from the new tariffs, as higher material costs could lead to increased home prices for consumers.
In conclusion, while the tariffs aim to support the domestic steel and aluminium industries, they could have a significant ripple effect on the prices of everyday goods, from canned food and cars to construction materials and appliances. Consumers may end up paying the price for these policies as businesses pass on the higher costs.
