NAFTA, Steel, Aluminum and Tariffs

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As many have inferred, this tariff may be a negotiation tactic, which may or may not roll out the way it is being described. Being Canadian, and from a country that is impacted by this proposed plan, I looked for data to understand more about the steel and aluminum imports to the USA. I was a little surprised by what I learned (note; I was not looking for this type of data, just looking where the US gets its aluminum and steel from):

 

  • 16% of the steel imported into the US comes from Canada, China is not even in the top 10 countries the US imports from
  • Canada is the largest supplier of Aluminum to the US, 90% of what we produce goes to the US and supplies about half of the US aluminum requirements
  • Media makes this sound like its USA against China, however, it seems more like USA against Canada, except, that the stuff from Canada has global ownership, maybe that is why other countries are getting so excited about this tariff:
    • Brazilian company bought Canadian Inco, the second largest nickel producer in the world
    • UK company bought Canadian Alcan Canada’s largest Aluminum company
    • Swiss company bought Canadian Falconbridge and nickel and copper mining company
    • US Steel bought Canadian Stelco one of Canada’s 2 largest steel mills
    • Luxembourg company bough Dofasco, the other of the 2 largest steel mills in Canada
  • US trade surplus to Canada is around $12 Billion when both products and service exported to Canada are considered
  • US/ Canada agriculture trade is balanced and Canada is the second largest market for agricultural products from the US behind China who is the #1 market for US agricultural products

 

There is a lot of “reacting” that is happening now and something is in motion that will have many of us looking for ways to adapt to this sudden, potential change, and/or, other ones coming our way that are not even on the radar yet. Countries and governments around the world are looking at trade with the same ferocity as Trump; I sure hope that cooler heads will prevail.

 

The best advice I got way back was, “it is better to be smart, that right”. The upcoming PMPA Management Update will be buzzing with this issue, and that combined with the Economic Forecast from Brian Beaulieu will be a very good place be to get “smarter” about this situation. There will be several metal supply companies there as well, and it will be interesting to hear firsthand what their strategies are on this topic. As a matter fact, I think in light of the current circumstances, the PMPA would do well for its members to have someone or a group from the metals industry to get up in front of the audience and let us all know what their companies are doing in the face of this proposed tariff.

 

Looking 5 to 10 years out and what the future of manufacturing will be like, is the most powerful place you can stand today. The supply chain as we know it, centers of power and influence, the products we use, and who uses them will be changing. The PMPA is starting to explore this and develop useful tools and information to help companies like yours with young leadership, and long futures to adapt and thrive, now and decades from now.

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