How Will Tariffs Affect Scrap Metal Prices?

Scrap metal prices possibly affected by tariffs

How Will Tariffs Affect Scrap Metal Prices?

The new tariffs imposed on steel and aluminum imports have been debated feverishly in the mainstream news cycle since they were imposed this year. While the primary goals of the tariffs were to “even the international playing field” and to defend American business and workers, some business entities are worried about adverse effects of the new laws. The scrap metal industry is a type of business that is relatively close to main street and one that has the potential to affect everyday consumers. With that in mind, let’s have a closer look at the effects of President Donald Trump’s tariffs on the scrap metal industry, including scrap prices, and whether they are positive policies for the average person.

The 2018 Tariffs Explained

The Trump administration’s tariffs affect a slew of commodities and products that are imported from China and other countries. The tariffs include:

  • 25% tariff on steel imports
  • 10% tariff on aluminum imports
  • 20% on first 1.2 million washers and 50% on all subsequent washers
  • 30% tariff on solar panel components
  • 25% tariff on over 800 other foreign goods

The tariffs apply to imports from every country except Mexico and Canada for the time being. Canada is the largest importer of steel and aluminum to the United States with 41% of our aluminum and 16% of our steel coming from our northern neighbors.  With the recent changes to the United States-Mexico-Canada Agreement (USMCA), it is unclear exactly how this will affect the scrap metal industry.

How will Trump’s Tariffs Affect Scrap Metal

Scrap metal recycling is an enormous business in the US and abroad. Typically, companies will ship scrap metal to have melted down, which will then be used to create new steel or aluminum products or materials. The new Trump tariffs will affect this ecosystem in several ways. Firstly, foreign companies will be charged a tariff or fee to ship that recycled steel or aluminum back into the country. Because of the fee, it will most likely dissuade companies from shipping metal to the US or, the more likely scenario, is that steel and aluminum manufacturers that use scrap metal as a raw material will begin charging the end user more money to make up for the price increases.

As prices for steel or aluminum increase, domestic manufacturers will have to deal with the extra costs imposed by the tariffs by either cutting jobs, increasing prices, or finding a new domestic provider. This has the potential to be great news for US-based metal processors in the form of plentiful amounts of new business. Because supply and demand are intricately connected, the increase in production could cause a new increase in demand. Theoretically, an increase in demand for steel and aluminum could cause a perfect storm that creates the highest prices for scrap metal ever seen. Unless, of course, the number of individuals selling scrap metal also skyrockets and dilutes the demand for scrap metal.

Different Opinions on Steel Tariffs

American voters largely oppose the tariffs, with 50% of individuals in a poll saying they did not support the tariffs on steel and aluminum imports. When polled in a Reuters survey, nearly 80% of the 60 economists questioned, said that the tariffs will harm the U.S. economy. Even the Speaker of the House of Representatives, Paul Ryan, felt that the White House administration should have used an alternative approach to deal with deplorable trade practices. Alternatively, supporters of the steel and aluminum tariffs claim that the move will halt the selling of this valuable material at an artificially low price. This unfair “dumping” of steel and aluminum is thought to be detrimental to US workers.

Current Scrap Metal Prices

Upon the announcement of the tariffs on steel and aluminum, prices for aluminum and steel spiked immediately, but then returned to close to their historic market price. While prices for scrap metal have evened out after the news broke, it’s predicted that prices will most likely continue to increase meaning that people needing to sell scrap metal will be in a decent position to do so.

If you’re looking to recycle unwanted scrap metal, drop by one of our convenient East Tennessee locations, contact Roane Metals Group online, or call us at 865-354-4282 for current metal prices.