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The Impact of Steel and Aluminum Tariffs on Trailer Pricing

Recently, new tariffs on steel and aluminum were announced by the Trump administration. These developments sent the markets into a tumble and affected almost every vertical relying on these metals.

Although these tariffs of 25% on steel and 10% on aluminum were not immediately implemented, they are likely to increase the cost of imported materials. At the same time, they will prompt the domestic producers to increase their prices as well.

The Current Import Scenarios:

The primary metals market can be extremely complicated. China is the world's largest producer of metals like steel and aluminum. At the same time, this South Asian manufacturing giant is the largest consumer of primary metals. This consumption is intended to build products that are exported in bulk to the US markets as well.

The USA buys a lot of commodities from China. However, the list of imports does not include aluminum. In fact, the country fetches nearly 43% of aluminum required by its domestic markets from Canada. Russia is the second-largest supplier with 11% supply. The production of this primary metal relies on an excessive power supply. This is where the problem exists. Its production is low in America mainly due to the rising electricity costs.

In terms of steel also, Canada is the largest supplier followed by Brazil, South Africa, and Mexico.

The Impact of Tariffs on the Trailer Industry:

The average impact of these new tariffs on trailers will depend on the amount of metals used in these vehicles. In the past few years, the trailer sales have reached record highs with more orders coming from freight shipments. The fleet operators are ordering new equipment to leverage the cuts in corporate taxes. Despite the rising prices, there have been consistent demands for these vehicles. But, as per industry experts, the current rate of order may get slightly depleted with these tariffs.

However, with North American Free Trade Agreement (NAFTA) exempting most of the products traded among America, Canada, and Mexico, it can be expected that these changes might not badly hit the trailer industry. Contact us to know more.