In our January blog we talked about the fact that the Commerce Department had announced preliminary RETROACTIVE ADD duties of 301.64% on ALL Chinese producers and exporters. For any company that sells products made from steel and aluminum, this decision will have an impact on prices. Everything involving China is currently to be determined, however, U.S. customers should anticipate that higher tariffs and effects of the coronavirus will result in more volatile prices for steel and aluminum goods in the future. What can we expect in 2020 for prices on flooring fastener products like staples and finish nails?
Higher Tariffs on Steel and Aluminum
In January President Trump signed a proclamation that expanded tariffs on steel and aluminum imports from specific countries. This proclamation increased tariffs on derivative steel products 25% and derivative aluminum products 10%. Countries with products exempted from these additional tariffs are Argentina, Australia, Brazil, Canada, Mexico and South Korea for steel products and Argentina, Australia, Canada and Mexico for aluminum products.
These higher tariffs were placed because import volumes of derivative products increased significantly after the original tariffs on steel and aluminum were put in place. Those tariffs increased prices on raw materials, not finished goods. The new proclamations appear to be an order to align the impact of tariffs against finished imported material. In other words, the Department of Commerce is attempting to close any loopholes.
Since the goal of tariffs is to protect and encourage American manufacturing output, if imports increase from the exempted countries, President Trump is likely to increase tariffs on them as well.
DOC Tariff Changes Do Not Affect Collated Steel Staples
As of February 8, 2020 the new steel tariffs will affect most nails and other steel fasteners but not collated staples which were specifically excluded. Nail products affected are the following:
- 7317.00.30 Threaded pins for powder actuated nailers
- 7317.00.5503 Collated wire coil bright nails
- 7317.00.5505 Collated galvanized plastic strip nails
- 7317.00.5507 Collated plastic strip nails (all others, not galvanized)
- 7317.00.5560 Bulk bright threaded nails
- 7317.00.5580 Bulk threaded nails vinyl, resin or cement coated
- 7317.00.6560 Bulk nails not made of round wire, not cut
China Suffers under the Coronavirus
Complicating matters further, we can expect that any company sourcing Chinese made products will be affected by not only tariffs but also delays in production due to the coronavirus. While the situation with the coronavirus is not clear, many large cities and manufacturing centers in China have been shut down while mill personnel are under quarantine. China’s New Year celebration also impacted production which currently is a month behind normal.
The coronavirus has affected mills even outside of China too. They rely on China for raw steel and aluminum and if the supply chain comes to a halt, so will their mills. One potential impact is workers who traveled to their homeland in some cases were not permitted to return home due to concerns about the virus. Only recently have some factories returned to work, and they are subject to strict monitoring by the Chinese government.
Ultimately, this news means that prices for flooring fasteners will be increasing and this is likely to affect staples too in the very near future. Fortunately, Bond Products does not source any of our fasteners from China which means that delays in production and higher tariffs placed on Chinese products will not affect our prices or product availability.
We live in interesting times, but we can promise our customers that we will continue to offer competitively priced flooring supplies for all of your flooring fastener needs.