President Donald Trump’s decision Thursday to enact steel tariffs on the importing of foreign steel and aluminum has a number of HVAC and construction industry groups criticizing the decision.
Within two weeks, the metals from countries other than Mexico and Canada will carry new taxes of 25 percent on steel and 10 percent on aluminum. The president said the levies will strengthen an industry that has been battered by unfair international competition, especially from China.
But any gains steel companies enjoy come at the expense of the rest of the economy, according to groups such as the Associated General Contractors of America, which estimates that 30,000 jobs could be lost if the tariffs lead to a protracted trade war.
"These new tariffs will cause significant harm to the nation's construction industry, put tens of thousands of high-paying construction jobs at risk, undermine the president's proposed infrastructure initiative and potentially dampen demand for new construction projects for years to come,” said Stephen E. Sandherr, the association’s CEO. "The bottom line is that any short-term gains for the domestic steel and aluminum industries will likely be offset by the lower demand that will come for their products as our economy suffers the impacts of these new tariffs and the trade war they encourage.”
In a joint statement, National Tooling and Machining Association President Dave Tilstone and Roy Hardy, president of the Precision Metalforming Association, said the tariffs will make it more attractive to build machinery outside the U.S.
“These tariffs will damage downstream U.S. steel- and aluminum-consuming companies, as the U.S. will become an island of high steel prices that will result in our customers simply sourcing our products from our overseas competitors and importing them into the United States tariff-free,” the statement said.
While many GOP members of Congress have criticized Trump’s decision, the president has wide latitude in trade matters. Trump used his authority under section No. 232 of the Trade Expansion Act, a 1962 law aimed at opening borders to U.S. goods, to enact the taxes. It gives the president the power to determine if imports threaten national security and make changes through the use of targeted quotas or tariffs. The White House says because steel and aluminum are widely used in military equipment, the health of both industries is a national safety issue.
The Air-Conditioning, Heating and Refrigeration Institute, which represents 320 manufacturers of HVAC equipment, said new taxes will not help its industry or the country overall.
“As major users of steel and aluminum, we have been proactive in explaining to the administration that the HVACR and water heating industry would be negatively impacted by an increase in tariffs, as would the consumers that rely on the products we manufacture," said AHRI President and CEO Stephen Yurek. "While we have been pleased with the Trump administration's enthusiastic support for manufacturing, and are happy that the president did include at least a temporary exemption for supplies from Canada and Mexico, we believe this step to be injurious, rather than helpful, to our efforts to increase American manufacturing and create jobs.”
The Heating, Air-conditioning and Refrigeration Distributors International said domestic steel and aluminum producers cannot currently satisfy demand for materials used products such as the low-gauge foil used in foil-scrim-kraft facings for duct board and duct wrap. Importing some metal is essential. Any price hikes due to increases in material costs could reduce members’ sales.
"The immediate impact of these new tariffs will be felt first by our suppliers," said HARDI CEO Talbot Gee.
For now, the association will monitor the market, Gee said.
"The HARDI Sheet Metal and Air Handling Committee has been integral in working with members for our analysis of the potential impact of these new tariffs,” he said. We are confident in their ability to give continued, accurate assessments of the effects on our industry as this new policy is implemented."
Many of America’s trading partners are livid at Trump’s decision. The 28-nation European Union has threatened to enact retaliatory tariffs on a range of imported U.S. goods including alcohol, clothing and construction materials including HVAC equipment.
Perhaps not surprisingly, officials with several U.S. steelmakers have praised the president’s move, saying it was overdue and assuring manufacturers they can meet domestic demand. Some have promised to restart closed mills. Cleveland-based Majestic Steel USA, which has a number of customers in the HVAC market, said it is ready.
“We recognize the importance to service our customers and keep them competitive and will do everything to balance these efforts,” Majestic said in a statement sent to Snips.
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