How Do Metal Tariffs Affect Scrap Value?

Of great concern in the scrap metal industry is the ongoing trade wars. Recently President Trump announced his intention to apply metal tariffs for all imports (with the exception of Canada and Mexico) that arrive in the US. This can have dramatic short and long-term consequences for all companies that deal in metal scrap removal in Clare, MI. Here are a few possibilities.

Impact on the US

Scrap MetalOne of the most dramatic effects will be on those companies that rely on metal from international companies. Since that metal will now be more expensive, the companies that rely on it will have to make some changes to remain competitive. They could charge more for their services, downsize their work staff, or accept the reality of losing business. A likely possibility is that they look for domestic sources of metal to avoid the tariffs. Consumers, naturally, can expect to pay more for items like cars because importers will have to make up for the money they’re paying on the tariffs. On the other hand, metal processors in the US might be happy to see the tariffs go into effect if they achieve their desired outcome of increasing demand for domestic metal. This increasing demand for scrap metal should result in higher prices for domestic scrap.

Impact on Trade Partners

The businesses that will be most affected are companies overseas who sell metal directly to US companies. Faced with tariffs, they can expect to see a fall in demand for their products as companies search for new sources of materials. If this switch to domestic scrap happens quickly, you can expect to see foreign companies (and some of their partners here in the US, like car manufacturers) suffer, and their stocks fall. Of course, there’s the added possibility that the countries being hit by the metal tariffs retaliate by slapping tariffs on American scrap metal which could impact markets further. What the impact would be is complicated at this time, but it could raise prices of scrap around the world, or force companies to reduce their need for scrap

The Effect on Scrap Metal Prices

Scrap Metal 2As we are dealing with several unknowns, all we can do is examine the possibilities. We know for certain that there will be some impact on scrap prices, but there is no telling when this will take place, nor do we know the extent of the impact. Furthermore, we don’t know which countries will respond in kind to the imposition of tariffs. For the time being, however, the prices for US scrap metal are strong and stable, so it’s still a good time to be in the business of buying and selling scrap.

How the tariffs on metals will affect the price of metals in general — and the value of scrap specifically — is hard to say. However, scrap metal services are still moving forward as they always have. That’s why if you require scrap metal removal services in Clare, MI, you can call Fair Salvage Company at (989) 386-7552. We are in the business of buying your scrap metal regardless of what the future holds, so give us a call today!