Steel and aluminum imports have been singled out by the White House, and though plenty of questions linger about the development, prices for recyclables could jump in the short term.
In March 1 remarks, President Donald Trump said he plans to impose import tariffs of 25 percent for steel and 10 percent for aluminum, measures he said would be in effect for “a long period of time.” He said the proposals are being written this week.
He said the goal is to bolster the domestic steel and aluminum industries by reducing what industry groups have described as unfair competition with overseas companies.
“What they do is they dump massive amounts of product on our country, and it just kills – it destroys our companies and our jobs,” Trump said. “And it’s been happening for so many years, and we are not the beneficiary.”
The tariff talk comes shortly after the release of Department of Commerce reports on steel and aluminum imports. They found substantial impacts on the domestic industries for each material, and characterized the effects as a national security threat.
Industry groups react
The impact on the scrap industry as a whole is uncertain, since the various industry sectors could fare differently. The top trade organizations for recovered materials are primarily taking a wait-and-see stance.
David Biderman, executive director of the Solid Waste Association of North America (SWANA), said the tariffs would have a number of impacts on the waste and recycling industry if implemented, chiefly due to the anticipated rise in commodity prices the tariffs would bring.
“In the short term, the tariffs will likely generate a little more revenue for recycling programs,” he said. “However, solid waste vehicles and containers are made primarily of metal, and their cost can be expected to increase as well.”
He added it’s “too early to tell whether these changes will have similar impacts in Canada,” which would be subject to the tariffs for steel and aluminum shipped into the U.S.
The Institute of Scrap Recycling Industries (ISRI) has not taken a stance on the proposal.
“Until we see more details from the administration about how they’re going to implement these new tariffs, we don’t have a clear (position) on how it impacts the recycling industry,” Adina Renee Adler, ISRI’s senior director of international relations, told Resource Recycling.
The National Waste and Recycling Association (NWRA) is following the developments and will “do its part to help meet the nation’s steel and aluminum needs,” said NWRA spokesman Brandon Wright.
Steel and aluminum interests have lobbied for import controls, citing imports as artificially driving down metal prices and hurting American businesses. In statements following Trump’s announcement, the American Iron and Steel Institute thanked the president for “following through on his commitment to addressing the steel crisis.” The Aluminum Association also released a statement in response to the Commerce reports, describing Trump’s “commitment to strengthening the U.S. aluminum industry.”
Reducing foreign competition would likely drive up prices and increase demand for domestically created steel. It could also translate to more demand for scrap metals. But the end users paying higher prices would almost certainly pass the cost onto consumers. Higher prices could diminish sales, ultimately lessening demand for the metals.
That fear was clearly articulated in a release from the Beer Institute, an industry association. The group condemned the tariff proposal, describing it as a new tax on brewers and beer importers. The aluminum tariff would “increase the cost of aluminum in the United States and endanger American jobs in the beer industry and throughout the supply chain,” the group wrote.
The Can Manufacturers Institute similarly criticized the tariffs and said it would file a petition with the Department of Commerce asking for materials used in can manufacturing to be excluded from the import tariffs.
Although the tariffs would only cover steel and aluminum, they may have bearing on other materials as well.
Trade war coming?
Shortly after the tariff announcement, the European Commission released statements condemning the policy. The statements called the proposal “a blatant intervention to protect U.S. domestic industry” and said the Commission would propose “countermeasures against the U.S. to rebalance the situation.”
Over the weekend, numerous countries made similar announcements, leading the World Trade Organization (WTO) to comment on Monday. Roberto Azevêdo, director-general of the WTO, described the “real risk of triggering an escalation of trade barriers across the globe” in response to the flurry of recent trade policy announcements.
“Once we start down this path, it will be very difficult to reverse direction,” he said. “An eye for an eye will leave us all blind and the world in deep recession. We must make every effort to avoid the fall of the first dominoes. There is still time.”
Photo credit: Jatuporn Khuansuwan/Shutterstock
