Defense Industry braces for steel and aluminum price hikes

a reply to: RadioRobert

Thanks for the clarification...

pretty sure the majority of the defense industry has to by law keep most of it's resources US based in the event of a war

a reply to: gariac

Defence contracts are usually required to buy American made goods.
Custom wheel manufacturers and the like might feel a pinch. But if a set of wheelsnalready costs $5,000. are you really going to care that the cost went up to $5,100. Because of the tarriff?

www.canadiansteel.ca...

I caught Kudlow on Fox News Sunday. It turn out we have a trade surplus with Canada regarding steel.

The World Trade Center was built with about 200,000 tons of steel. In January of this year the price of steel was about $700/ton.

A 20% increase in the price of steel would mean that the steel to build another World Trade center would cost about $25 million more. Chicken feed.


I wonder if Donald has any projects in the planning stages.

originally posted by: Phage



I wonder if Donald has any projects in the planning stages.

The wall....

originally posted by: olaru12

originally posted by: Phage



I wonder if Donald has any projects in the planning stages.

The wall....

The DPRK of s having difficulty paying their hotel bill.
www.usatoday.com...

Maybe Mexico will pay the bill. I hear they are very generous.

China and Brazil are doing a lot of sht. I was tracking ZTE operations in Brazil before the public found out about ZTe vulnerabilities. Now you can’t even take a ZTe device on a military base. But you are absolutely correct..

originally posted by: RadioRobert
a reply to: nwtrucker

China was getting around the tariffs and restrictions by dumping steel on Korean third parties (also, through Brazil, notably) who would import it to the States. The quota reduction also reduces any incentive for the Korean steel industry to traffic Chinese steel at the expense of moving their own product.

The tariffs aren't happening in a vacuum.

originally posted by: VforVendettea
Defence contracts are usually required to buy American made goods.
Custom wheel manufacturers and the like might feel a pinch. But if a set of wheelsnalready costs $5,000. are you really going to care that the cost went up to $5,100. Because of the tarriff?

Not necessarily. Many programs have offsets that require purchase of foreign made goods. These would use local standards. And that is not counting the programs that have metric requirements. A ton of this is made in foreign mills.

The question that exists is if the tariffs will affect finished goods or just raw material.
Raw material costs can be 30%-40% of the cost buildup. So a 10% increase equates 3% increase in the final price of the goods (roughly).

To top it all off, many contracts are fixed-firm pricing. An increase in costs will be absorbed by the supplier. Granted many defense contracts have escalation contingencies built in, but those are mostly for inflationary pressures.

Defense projects (at least for the sub. tiers) do not have a ton of margin to give up. This will hurt.