By Deanna Tolliver
Associate editor
The Trump administration recently announced a 25% tariff on imported steel and 10% on aluminum. Indiana, the RV capital of America, is in the unique position of being both hurt and helped financially by this move.
Almost 90% of the RVs manufactured in the U.S. are made in Indiana. They all use steel and aluminum in their construction. Coincidentally, Indiana is also the number one steel-producing state in the U.S., and has been for more than 30 years.
WHAT DO YOU THINK OF THESE TARIFFS?
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The U.S. doesn’t make nearly the amount of steel it needs. In 2017, steel “consumption” in this country stood at 97 million metric tons (MMTs), but steel production was only 82 MMTs. The U.S. is the largest importer of steel in the world, and the top three countries we buy it from are Canada, Brazil, and South Korea. We import only 2% of our steel from China.
Mills in Indiana produced more than 24 MMTs of steel in 2017, and employed about 20,000 steel workers. Most of the mills are concentrated around the south shore of Lake Michigan, and for good reason: iron ore from mines and pits in Michigan and Minnesota is easily transported by boat to the mills. This type of mill has been steadily declining, however, due to outdated technology and rising costs. Blast furnace technology uses iron ore; the newer technology, electric-arc, uses electricity and turns scrap iron into steel. The latter is much, much less expensive to start up and maintain,
When the steel tariffs were announced, it was good news for some: more than 3,000 steel worker jobs have been restored in Illinois and Ohio. Production is expected to increase in Indiana as well.
And the same is true for the aluminum industry: idled potlines (electrolyzing cells used in smelting) are restarting in Kentucky and Indiana. The top three countries that will be paying the higher U.S. import taxes on aluminum are Canada, Mexico, and the European Union.
THE BAD NEWS FOR RVers is that because the costs of steel and aluminum components in RVs will go up, the cost of making new ones will go up, and so certainly the cost of buying a new RV will go up as well. Only time will tell if this country can make enough steel and aluminum so that imports can be drastically reduced, which may help costs. That is, frankly, unlikely.
But the fact remains that more people are employed in industries that BUY steel to make products, than in steel-making itself.
RV Business quoted Jason Lippert, CEO of Lippert Components, and home to 11,000 employees, as saying “….what that means for our business is immediate increased prices on commodities, which drives the consumer price up, ultimately. It will take several months for it to flow down to the consumer, but everybody’s trying to figure out how to deal with this ….”
Lippert stressed that his views aren’t based on any sort of partisan politics, but on the realities of running a U.S. business generating $2.1 billion in annual revenues that is heavily dependent on the pricing of commodities like steel and aluminum.
If the bubble bursts in the RV industry, it will likely be due to a combination of over-zealous production, lack of qualified workers, and rising costs of components. I believe the future of used RVs is looking very bright indeed.
You mean Canada can produce steel and aluminum cheaper than the US even with shipping? Sounds like some of the deals made with Canadian companies are the real concern. The RV industry needs to get real about what is happening.
Other countries have been taking advantage of the US.
It would be a fair comment if you produced a List of us tariffs. By the way Canada buys more USA dairy products than any other country
That’s because of simple geography. We have the most fertile lands in the whole world, for things like dairy production. Canada has vast amounts of timber, so we trade.
What Americans don’t know, is that NAFTA is not equally fair to both countries. But, as Reggie Hamond once said, “there is a new Sharif in town, and his name is…….”
It’s difficult to find a list of US tariffs. If you have one, I’d love to see it. Generally this is what I’ve found: “The World Trade Organization (WTO) tracks how many imports face tariffs of more than 15 percent, and on this metric, the United States looks better than its peers. According to the WTO, 7.1 percent of Canadian imports face these high tariffs, 4.1 percent of imports to the E.U. face them and 2.8 percent of imports to the United States are hit with high tariffs.”
As for your comment about US dairy, that is incorrect. Canada is #3 behind Mexico and Southeast Asia according to the US Dairy Export Council.
For perspective, here are just a few Canadian tariffs levied on American products:
270% dairy
69.9% Sausage
57.8% Barley Seed
49% Durum Wheat
26.5% Bovine/Meat
18% Table Linen
Oh, and Canada created a new “ingredient strategy” tariff in 2015.
Free trade is a great goal, but when your “free trade” partners aren’t playing fair, you need to respond in kind.
Talk to my friend, and he’s a lot like Reggie Hamond!