Defense Industry braces for steel and aluminum price hikes

thehill.com...

The 25 percent tariff on imported steel and 10 percent tariff on aluminum, which went into effect Friday, is expected to raise costs for the U.S. defense industry, biting into its bottom line.

Though U.S. defense firms primarily buy steel and aluminum domestically, the tariffs are likely to lead to increased prices in the U.S., said former Pentagon official Andrew Hunter, a senior fellow at the Center for Strategic & International Studies.

These industries have extremely sophisticated purchasing departments. I would be shocked if they didn't have some hedge schemes already in place. Long term contracts, options, etc.

a reply to: gariac

Defense concerns are already buying most steel and aluminum from US sources.

Now we can fully buy American at a 15% to %25 savings and save even more money by avoiding structure failure

caused by cheap foreign steel.

Win/win situation.

Hopefully they were already buying American steel and aluminum and if not hopefully they will now. If they were already buying American then they wouldn’t have a price increase. They only get hurt if they were using foreign products to build out planes.

a reply to: gariac

An f35 cost $90ish million.
I doubt a few grand in steel costs will make much difference.
But anything to raise prices.


Sorry, that's billion not million

a reply to: Bluntone22

link

AMI is a Reliance Steel and Aluminum subsidiary.

"Yeeeaaahhhh baby"
Looks like the US is gonna get gearing up to open up even more jobs
Steel and aluminum
The rest of the world can eat theirs (they may have to)

a reply to: Bluntone22

They won't see an increase for awhile. They're already using long lead items for the next lot or two.

originally posted by: abe froman
a reply to: gariac

Defense concerns are already buying most steel and aluminum from US sources.

Now we can fully buy American at a 15% to %25 savings and save even more money by avoiding structure failure

caused by cheap foreign steel.



Win/win situation.

Actually no. The domestic prices will increase. No savings. Did you actually read the article? The defense industry will have to eat the increase unless they have hedges.

Well, if the cost of aluminum and steel go up a bit for defense spending, what is the difference? The government is collecting the import tax money anyway so the true cost will not change much.

This article is a feeble attempt to make the law sound worse.

Perhaps the USA and Europe will stop sending all their old junk to China to be recycled and instead salvage the metals themselves. It just amazes me to see a supermarket run an upcycling box full of broken computers and headphones, and wonder how much rare-earth metals are in the headphones and internal speakers.

originally posted by: rickymouse
Well, if the cost of aluminum and steel go up a bit for defense spending, what is the difference? The government is collecting the import tax money anyway so the true cost will not change much.

This article is a feeble attempt to make the law sound worse.

No. The military manufactures will be buying domestic steel and aluminum. They were doing that anyway. There will be no extra duty collected.

a reply to: gariac

Who cares???

They’re moving to ceramics anyway!!

Titanium is what you should worry about.

Ceramic aircraft fuselages?

LOL.

And Titanium will never replace Aluminium.





P-8 Poseidon also has almost completely aluminium fuselage.

originally posted by: gariac

originally posted by: rickymouse
Well, if the cost of aluminum and steel go up a bit for defense spending, what is the difference? The government is collecting the import tax money anyway so the true cost will not change much.

This article is a feeble attempt to make the law sound worse.

No. The military manufactures will be buying domestic steel and aluminum. They were doing that anyway. There will be no extra duty collected.

The article already said most of the metals are domestic.

The article stated that the price of metals domestically is going to increase.

Classic supply and demand.

a reply to: C0bzz

AIrcraft manufacturers are integrators. They buy engines, servos, etc. The thing they actually make themselves is the airframe, and that got more expensive. But the value added by the manufacturer is knowing how to connected all the components. So there is still plenty of money to be made.

If you reread my first post, I wasn't predicting doom and gloom. Rather I figured the companies have it under control.

a reply to: gariac
Even if they dont buy domestic they can buy from Australia which is exempt from these tariffs anyway. And we do do a huge amount of iron ore/steel and aluminium. I dont think the US DoD is exactly quaking in their boots about these tariffs.

a reply to: gariac

It is interesting to note that SK, the first or second largest exporter of steel to the U.S., has not suffered the tariffs.

They have apparently agreed to cut their exports to the U.S, by 1/3. I wouldn't be surprised if they have an 'understanding' to sell that reduced volume to military manufacturers assuming quality standards are met. Just a thought.

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: nwtrucker
a reply to: gariac

It is interesting to note that SK, the first or second largest exporter of steel to the U.S., has not suffered the tariffs.

They have apparently agreed to cut their exports to the U.S, by 1/3. I wouldn't be surprised if they have an 'understanding' to sell that reduced volume to military manufacturers assuming quality standards are met. Just a thought.

For clarity, South Korea is ROK. North Korea is the DPRK.

a reply to: Grimpachi

If imports to the U.S. goes down, 'supply' to the rest of the world goes up. That reduces world prices. That leaves the U.S. free to import for the military from other suppliers that do not suffer the tariffs and the same or even lower prices than the current level.