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Ongoing trade disruptions

March 12, 2018

UPDATE: Ongoing trade disruptions

With all the news on the subject of steel duties and trade impact, we thought we would provide our perspective:
The following are some relevant facts:

1. Countervailing duties of up to 300% were imposed by USA against China, Vietnam, and others in late 2016. Since this time, imports to the USA from these countries have stopped.
2. Pricing from US and Canadian steel mills increased 33% since these countervailing duties were imposed.
3. Recent duties recommended by the Commerce Department and approved by President Trump as a matter of National Security are an additional 25% on ALL importers.
4. The United States and Canada are very connected as it relates to steel trading:

o Canada imports are 6 Billion dollars annually from USA.
o USA imports are 6 Billion dollars annually from Canada.
o Canadian steel mills send 45% of production to USA.
o USA will continue to be a net importer, as it CANNOT produce all of its own requirements.

We can conclude that the Canadian mills will continue to ship steel into the USA. (We believe this will be true whether the 25% duty is applied in full or not.) All US producers will all raise their prices 25% to take advantage of the protection. Canadian regulators may or may not impose import duties into Canada.

All these factors are putting upward price pressures and increased volatility onto Canadian markets. Disruptions and reallocations will also cause supply uncertainty.

For these reasons, we expect the volatility, supply issues, and run-up of our steel input costs will continue. Our April 2, 2018 price increase on Bailey products will likely not be the last in 2018.
We will continue to manage our steel purchasing, inventories and supply practices appropriately and diligently. Our goal is to be a reliable supplier of quality Canadian produced products.

Please plan accordingly!

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