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The material supplier impact of trade tariffs by Melissa Albeck CEO of Matmatch

The material supplier impact of trade tariffs by Melissa Albeck CEO of Matmatch

Steel and aluminium suppliers across the globe will be digesting the news that the US president Donald Trump will impose tariffs on imports of the two metals. Here, Melissa Albeck, CEO of online materials supplier database Matmatch, considers what effect these plans could have — and how steel and aluminium suppliers can mitigate the impact.

US president Donald Trump recently announced that he plans to introduce 25% and 10% tariffs on steel and aluminium imports respectively. He believes the US “hasn’t been treated fairly” by other countries when it comes to trade. He also thinks that these tariffs will help boost the prospects for US steel and aluminium suppliers and, ultimately, benefit the American economy.

On Thursday 8 March, Trump signed the tariff plan into action, with notable exemptions for Canada and Mexico. The measures could take effect within two weeks.

Countries such as Canada and Japan, and international bodies such as the International Monetary Fund, have criticised the move. Many believe such protectionist measurements in the modern world benefit nobody. But whether this is the right move or not is beside the point here – what impact could tariffs on steel and aluminium imports have on suppliers?

Impact on suppliers

There are a few ways these tariffs could impact suppliers. Firstly, companies that export a lot of steel or aluminium to the US could be negatively affected. As their buyers face higher costs to import their materials, those same buyers may decide to switch to a US-based supplier. Indeed, that is ultimately one of the things Trump wants to happen.

Secondly, increased steel and aluminium prices could lead to reduced demand – at least from US buyers of the materials. That’s because companies that use a lot of steel or aluminium may have to raise their prices, which would impact the end consumer and could result in lower demand.

Third, companies may even look for alternatives to steel and aluminium – which ultimately would also lead to lower demand. While both metals remain popular to this day due to their properties and a wide range of applications, their relatively low cost (relative to many substitute materials, that is) remains important. If they are suddenly less competitive here, the substitutes may gain wider adoption.

Taken in isolation, this move would seem to have the greatest impact on companies that export and import a lot of steel and aluminium to the US. But that ignores the wider picture and potential for a trade war to ensue.

Already, both the EU and Canada – amongst others – have mentioned introducing retaliatory measures against the US if they impose the tariffs. The EU has threatened a “harsh and clear” response and could introduce countermeasures as soon as the US pushes through its legislation.

As a result, US suppliers that export a lot of their materials could suddenly find themselves at risk of losing customers abroad. That’s without considering the headaches such trade barriers cause for companies in general.

Mitigating the risks

For materials suppliers everywhere, this event is bound to have raised questions – even for those that don’t appear to be directly affected. Within the space of just a few weeks, companies that rely on the US for trade could see their situation dramatically altered. And, in the end, there could be further consequences for steel and aluminium suppliers that do any kind of cross-border trade.

That’s why suppliers know that they need to diversify and constantly be looking for new opportunities. Relying only on existing customers is a risky move. Companies have to look to expand both their customer base and the channels through which they reach them.

Matmatch can help; listing on the platform gives suppliers immediate access to a large pool of potential buyers. Suppliers can access new markets and get in front of buyers looking for viable materials for all kinds of projects.

Materials selection and sourcing is being brought into the digital age, and as business increasingly moves online, suppliers can’t afford to wait on the sidelines. Those that do risk losing out to rival suppliers.

Worried about the impact of the metals tariff on your business? Register as a listed materials supplier of aluminium or steel on Matmatch’s extensive materials database to gain access to buyers around the world. Just visit www.Matmatch.com/supplier.

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