In 1953, when the very first Corvette came out, the price of steel was very different than it is today. That first Corvette was available for $3,513, which would have been quite the sum.
But the price of steel is on the minds of many in the auto industry today, with concerns over how President Trump’s administration will handle the imports of the valuable metal.
Kristin Dziczek, Director of Industry, Labor, and Economics at the Center for Automotive Research in Ann Arbor, summarizes the thoughts of many in the automotive industry.
“Uncertainty is what’s problematic for the industry, and the most likely outcome for any remedy proposed is higher prices.”
The reason for this uncertainty is the possibility that the Trump administration could impose large tariffs on the importing of metals into the nation. These metals include steel and aluminum, which are integral to building cars, metal buildings, and just about every other major metropolitan structure.
Cheaper steels and aluminum have flooded the market in recent years, which has led to low prices, and many experts blame China and state-owned steel producers. White House officials and experts claim that these “low profits prevent U.S. steel and aluminum producers from investing in developing higher-grade metals…”
Currently, the U.S. is the world’s largest importer of steel, with an estimated 30.1 million tons purchased in 2016, which is a fifth of the global steel imports, according to the U.S. International Trade Administration.
The top sources for this imported steel are Canada, Brazil, and South Korea.
That is not to say that the U.S. doesn’t create its own steel, which is the source of much of the auto industry’s supply. But even domestic steel-producers are waiting to see what decision the Trump administration makes, as it could dramatically change the prices of their goods.
Producers in Kentucky, Ohio, and West Virginia are wondering about the effects that the Trump Administration’s tariffs could have on them, with AK Steel being a supporter of “investigations into threats to our country’s national security due to unfair and illegal trade practices by foreign producers.”
However, some experts are not so sure that the tariffs would have the positive effect on the region that the steel-producer hopes.
One such expert is Western Kentucky University Economics Professor Brian Stow, who predicts that President Trump will follow through on his pledge but have negative effects on the area.
“I believe that they’re coming but I’m not happy about it,” Strow said.
Stow believes that higher prices on imports will have a poor effect on regional businesses, like auto makers. This is especially important as there are more people in the region employed by auto makers than steel makers.
“Kentucky is big in the auto industry, and it turns out that cars need steel and most of the steel we put into U.S. cars comes from abroad.”
The Trump administration is expected to make their decision soon, and what that means for the auto and steel industries as well as foreign trade has yet to be seen.