Tariffs on Steel and Aluminum
As you are aware, on March 8, 2018 the federal government announced it is imposing a 25% tariff on steel and 10% tariffs on aluminum imports from all countries except Canada and Mexico. We understand there is a lot of confusion about how this will affect our company and the broader industry’s operations. The new tariffs take effect at 12:01AM Eastern on March 23. They apply to goods entered into the customs territory of the U.S. (any part where U.S. customs laws apply) or withdrawn from warehouse for consumption on or after that date.
The government action places a 25% tariff on flat, long, semi-finished, pipe and tube, and stainless steel and 10% tariffs on articles of aluminum that are: plate; sheet, strip, and foil (flat rolled products); wire; bars, rods and profiles; tubes and pipes; tube and pipe fittings; castings and forgings. The raw materials that our shop uses to produce your parts are long products- cold finished carbon, free machining, alloy and stainless steel bars- and the hot rolled and semi-finished materials used to produce them. Similarly for aluminum. We have attached the official listing of the HTS codes, and a “Plain-English interpretation” of those codes prepared by our trade association.
While exempting Canada and Mexico for now, the decision is broad and covers many of the raw materials on which our industry relies. It is our understanding through our industry trade association, the PMPA, and their contacts in Washington, that several countries are also seeking similar exemptions, which the administration can make on national security grounds. The Department of Commerce may also exclude any steel or aluminum product “determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality” and based on “specific national security considerations.” Our company is working through our trade association in Washington to put together a petition to exclude certain products not manufactured to the quantity and quality needed to support the U.S. manufacturing supply chain.
Avanti's Commitment to Customers
Please know, that here at Avanti Engineering, Inc., we are very closely monitoring these developments and have a direct line to the latest news from Washington. We are committed to continuing to meet our customers’ demand while also delivering a top quality and globally priced product. However, as you know, a 25% and 10% tax on any input will cause a ripple effect throughout the supply chain regardless of the product manufactured. Our industry is working with government officials in Washington lift these tariffs, provide exclusions, and to educate policymakers about the impact these tariffs have on manufacturing in America. We also anticipate the likelihood of supply uncertainty as the ports, shipping companies, exporters and the rest of the supply chain try to adjust to the new realities. We believe that lead times will lengthen and uncertainty of supply will grow.
Our most important commitment is to continue manufacturing the same quality product to which you, our customer, have come to expect, despite the new tariffs imposed by the government. In the mean time, Avanti Engineering, Inc., is looking at increasing our supply base to open up additional supply opportunities as well as offering suggestions to alternate materials as a means to offset the potential for increasing steel goods.
We look forward to continuing our valued relationship with you and working together and with our elected officials in Washington to produce quality U.S. manufactured products. Please do not hesitate to reach out to us directly if we can answer any questions or to discuss in more detail the impact on the pricing and availability of your specific product line.
Avanti Engineering Management
Rocco J. Bratta