Apart from competitive hurdles, there is the issue of higher transportation costs. The cost of transporting imported steel from countries like Brazil to California is much lower compared to the cost of transporting them all the way from the other end of the United States.
The case is similar in Shreveport, Louisiana. The new tariffs are yet to go into effect, but businesses are seeing increases in raw material costs.
Apart from raw material, there are chances of increases in transportation and distribution costs. These costs will ultimately have to be passed on to the customer, which is seldom preferred.
The steel companies fear that as prices go up, customers are likely to reduce their purchases and scale back on their projects. In some cases, projects could be completely shelved. This would not just lead to loss of revenues for the companies but would not bode well for the industrial sector either.
Trade partners have meanwhile warned that this decision could ignite a trade war. Although Trump’s decision appears to target China, it is less likely to hurt China and more likely to harm US allies like Europe. Europe is not at all pleased with the new rules and is planning a reciprocation of its own.