Steel Tariffs – A Manufacturer’s Perspective

The 25 percent tariffs levied on steel imports into the United States impact nearly every area of the economy. Manufacturers serving the water industry are keenly aware of this, as steel is ubiquitous in water and wastewater treatment plants.

The subsequent retaliatory tariffs introduced by many countries, including major steel exporters to the U.S. such as Canada, the European Union, China, India, and Mexico, create a business climate rooted in speculation. It is uncertain whether we have seen the last of these or whether additional countries will issue their own tariffs and what types of goods they will impact. Water and wastewater treatment plant expansions and process improvements take years to develop through design, specification creation, and construction. The added volatility has the potential to slow or delay project implementation while increasing overall project costs.

Steel is a global commodity and, as a result of the tariffs, the price of steel has increased in short order, and significantly in some cases. It is now common for fabricators’ steel price quotes to be reduced from 30 days validity to 10 days to mitigate risk. Some manufacturers in the water industry have reported that they have been unable to obtain price quotes from suppliers beyond a few hours or days.

Stainless Steel has increased by as much as a dollar per pound since the beginning of the year, an unprecedented increase by any measure.

Stainless steel, a critically important material in water and wastewater technologies, has increased by as much as a dollar per pound since the beginning of the year, an unprecedented increase by any measure. In addition to the steel used for equipment, these escalating costs impact construction materials, piping, wires, etc., inherent to large infrastructure projects. Given that, it is easy to see how the price to construct a treatment plant is very likely to increase.

These tariffs could end tomorrow, be changed without notice, or increase. While uncertainty in the market can sometimes be an opportunity, it can also create challenges for the consumer, making it difficult to accurately predict installed project costs for shovel-ready projects. Budgeting, purchasing, and planning will certainly be challenging in the coming months and water and wastewater improvements in early stages of development will likely require some risk mitigation related to cost. End users may even delay starting a large project until the tariff reality solidifies. Material suppliers and fabricators may be forced to include safety measures in quotes due to the duration of projects.

WWEMA Can Help

The Water and Wastewater Equipment Manufacturers Association (WWEMA) understands the impacts that increased steel costs have on its membership. WWEMA also understands the impacts additional costs can have on its members’ clientele of water and wastewater treatment plants (WWTP). Although WWTPs are considered critical infrastructure, the installed costs of any large infrastructure project are a strong decision factor in whether it moves forward.

WWEMA is actively involved in identifying these costs and challenges and is working to minimize the impacts for WWTPs and WWEMA members. WWEMA has reached out to President Trump and Commerce Secretary Wilbur Ross, among others, to inform them of how the tariffs could potentially impact existing contracts or slow down progress on new projects. If you’d like to be part of that conversation through WWEMA membership, please visit www.wwema.org or contact WWEMA Executive Director Vanessa Leiby at [email protected]. WW

About the Author: Adam Neumayer is the managing director of Hydro International – Water and Wastewater Solutions, as well as a member of the Water and Wastewater Equipment Manufacturers Association (WWEMA) Board of Directors.

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