Has inflation got you down when you go grocery shopping? Well, get ready for even higher food prices, at least for your canned goods. That will be one of several inevitable negative effects of the coming tariffs on tinplate steel.
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Ohio-based steelmaker Cleveland-Cliffs Inc. and the United Steelworkers union joined forces in January to file petitions for anti-dumping duties against eight countries, and countervailing duties against China, for allegedly selling tinplate steel (also called tin mill steel, a thin steel sheet coated in tin used primarily in cans for food packaging) in the U.S. at below-market prices, and in China’s case for the government subsidizing production. (Unusually, that’s a small piece of this puzzle; unlike so many areas of manufacturing, in tinplate, China is a smaller player, accounting in for only a little over 10% of the total imports from the eight countries named in this action.) The potential tariffs could be as high as 300%.
“Foreign dumping of tin products into the U.S. market has already forced significant layoffs at U.S. facilities; failure to curtail it will ultimately choke out domestic production, leaving can manufacturers beholden to foreign producers and their prices,” said USW international vice president Dave McCall. “Duties on tin mill products are essential to stabilizing the our market, restoring fair prices, and protecting good, union jobs.”
It’s certainly not a stretch to believe that China might be up to no good in the tinplate trade, given that country’s overall track record as a trading partner. But the other seven countries are Canada, Germany, the Netherlands, the United Kingdom, Korea, Taiwan and Turkey. That all those nations are colluding to undermine American steelmakers is just a bit tougher to sell, with the group including some of America’s staunchest allies and strongest trading partners.
"All tariffs are ultimately about making the rest of the country pay for favors dispensed by the Federal government to a more narrow sectoral interest,” said Samuel Gregg, distinguished fellow in political economy and senior research faculty at the American Institute For Economic Research, whose recent book, The Next American Economy: Nation, State, and Markets in an Uncertain World, made a strong case against tariffs and protectionism. “This particular case fits that bill exactly.”
“The tariffs will hurt can makers and end users,” said Thomas Madrecki, vice president of supply chain at Consumer Brands Association, an industry advocacy for U.S. CPG businesses. “They’ll make can making and food manufacturing less competitive in the U.S., and significantly reduce consumer buying power. This is not the time to be considering such petitions.”
But that viewpoint doesn’t matter. Once put into motion, such petitions follow a definitive investigative course through the Commerce Department and the U.S. International Trade Commission—one that, by design, is not allowed to consider the effects on downstream users or consumers. “These allegations go through a specific process that’s been shaped by years of lobbying,” said Madrecki. “The AC/CVD laws statutorily prohibit considering the impact on consumers.”
Predictably, then, the petitions have advanced steadily this year through several rounds of determinations by the two government bodies, with the next being the preliminary determination by the Commerce Department on the antidumping duties against the eight countries, expected today. “Commerce will be setting tariff levels that go into effect on this preliminary basis, before the final investigation wraps up early next year,” Madrecki said. “That means cost increases will soon hit supply chains and U.S. manufacturers–not to mention consumers.” With domestic producers not even making some of the types of tinplate required by can manufacturers, and with the generally thin margins across the canned food industry, the tariffs likely to be imposed by today’s decision will inevitably be passed on to consumers.
While the investigation by statute must ignore the effects on downstream players, though, reality won’t. “We’re a significant company in our area,” said Woody Swink, co-president of McCall Farms, a South Carolina food canning company. “We’re not a big CPG, we’re a family-owned business. But this will hurt our business, and it could be devastating to our growers and to other manufacturers who supply us. We estimate that our costs could go up by as much as 30%.”
That means consumer costs could rise by the same amount. Ironically, that could also hurt the U.S. government. “We have a good partnership with the U.S. Department of Agriculture,” said Swink. “They supply our product to food banks to feed hungry people. This would be really unfortunate.”
“In essence, it’s the government taxing itself,” added Madrecki.
But in the longer term, higher prices for domestic production also very likely mean more imports and less made-in-America food. “We’re already seeing an increase in imports of food from China because of the existing tariffs,” Madrecki said. A study commissioned by the CBA estimates that as many as 40,000 American jobs will be put at risk to protect 66 jobs in U.S. steelmaking. Information released by senator Joe Manchin (D, WV), who supports the tariffs, cited the entire workforce of about 950 as at risk at the Cleveland-Cliffs facility in Weirton, West Virginia, where the company produces its tinplate.
"Steel tariffs will have the same effects as all other tariffs,” said Gregg. “They will drive up the costs incurred by American companies that use steel. Based on past cases, that will result in job losses in the many more companies that are steel-using industries than in the steel industry itself. That's what happened during the Bush and Trump administrations and that is what will happen should the petitioners advance their sectoral interests by getting what amounts to yet another privilege from the Federal government."
Cleveland-Cliffs did not respond to a request for their input for this article. In a press release when the original petitions were filed, Lourenco Goncalves, Cleveland-Cliffs' chairman, president and chief executive officer stated, "The United States is still the largest importer of steel in the world, despite being the most environmentally friendly steel producing nation. As our filing shows, there has been a significant surge in unfairly priced tinplate imports flooding the United States over the past two years, and we cannot let this persist. We welcome competition with any and all imported steel as long as our U.S. trade laws are respected, and we will use all the tools at our disposal to remedy the situation.”
There are two other U.S. manufacturers of tinplate steel, U.S. Steel Corporation and Ohio Coatings company. Neither has taken a position on the petitions.
This article has been updated with a statement from the United Steelworkers.
President Donald Trump’s 50% tariffs on steel, aluminum and other metal imports are now in effect. They’re expected to impact everything from the obvious, like vehicle prices, to the not-so-obvious, like your grocery bill.
While one of the president’s biggest campaign promises was to lower food costs, this latest move threatens to do the opposite.
Many everyday products rely on steel and aluminum for packaging, including canned goods, soda and beer, pet food and more. Robert Budway, president of the Can Manufacturers Institute, told The Associated Press that domestic tin mill steel producers have dramatically decreased in recent years, making them reliant on imported materials.
“It plays into the hands of China and other foreign canned food producers, which are more than happy to undercut American farmers and food producers,” Budway told the AP. “Doubling the steel tariff will further increase the cost of canned goods at the grocery store.”
Even before this latest hike, many food companies had already warned of the impacts that Trump’s tariffs could have.
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The Campbell’s Co., whose soup cans are a staple for millions, has said it may be forced to raise prices. Likewise, Conagra Brands’ CFO stated at a recent Goldman Sachs conference on global staples that there is not enough supply for them to obtain all their materials from the U.S.
Even with the inflation rate cooling to 2.3%, many Americans continue to struggle to afford the necessities. A recent survey found more people are now turning to short-term “buy now, pay later” (BNPL) options to afford groceries.
According to LendingTree, the company behind that survey, about 25% of Americans now pay for their groceries that way, compared to only 14% in . It also found that 1 in 3 Americans say they use BNPL options as a “bridge” to get them through until their next paycheck.
As more people adopt this method of payment, more are paying late.. Short-term lender Klarna said in May that its consumer credit losses swelled 17% in the first quarter of compared to last year, hitting $136 million.
LendingTree’s survey found 41% of people paid late in the last year.
Industry experts say the late or missed installments are a sign of faltering financial health among a segment of the U.S. population. America’s total consumer debt has reached a record $18.2 trillion, and the New York Fed found household spending rose 4.5% in April compared to the same time last year.
In its latest report, the Bureau of Labor Statistics said grocery prices dipped 0.4% from March to April of this year. That marks the biggest decrease in food costs since September .
Specifically, sky-high egg prices fell sharply, down 12.7%. Still, though, they remain 49% higher than in . In , overall grocery prices are predicted to increase by 2.9%, according to the U.S. Department of Agriculture.
[Craig Nigrelli]
PRESIDENT TRUMP’S NEWEST TARIFFS HAVE OFFICIALLY TAKEN EFFECT – DOUBLING DUTIES ON IMPORTS OF STEEL, ALUMINUM AND OTHER METALS TO A WHOPPING 50 PERCENT.
AND WHILE THE INCREASE IS EXPECTED TO RAISE PRICES ON THINGS LIKE CARS AND CONSTRUCTION… YOU MIGHT NOT BE EXPECTING IT TO IMPACT YOUR GROCERY BILL – BUT EXPERTS SAY IT LIKELY WILL.
THINK ABOUT IT – MANY COMMON GROCERY STORE PRODUCTS RELY ON STEEL AND ALUMINUM FOR PACKAGING: CANNED GOODS, SODA AND BEER, AND PET FOOD – JUST TO NAME A FEW.
AND SOME OF THE BUSINESSES BEHIND THE COUNTRY’S MOST COMMONLY BOUGHT GROCERIES ARE ALREADY SAYING THEY EXPECT TO PASS PRICE INCREASES ON TO CONSUMERS.
AND IT COMES AT A TIME WHEN AMERICANS ARE ALREADY STRUGGLING TO AFFORD THE NECESSITIES.
A RECENT LENDING TREE survey FOUND 1 IN 4 AMERICANS NOW TURN TO SHORT-TERM “BUY NOW, PAY LATER” LOANS TO KEEP THEIR PANTRIES STOCKED.
AND KLARNA – ONE OF THE NATION’S BIGGEST LENDERS BEHIND THESE LOANS – SAYS MORE PEOPLE ARE PAYING ON THEIR INSTALLMENTS LATE, COSTING THE COMPANY 136 MILLION DOLLARS IN THE FIRST QUARTER OF 20-25.
LENDING TREE’S research BACKED THAT UP – FINDING 41 PERCENT OF THOSE SURVEYED SAID THEY’VE PAID LATE IN THE LAST YEAR.
MEANWHILE, AMERICA’S TOTAL CONSUMER DEBT HAS REACHED A RECORD 18 POINT 2 **TRILLION** DOLLARS…
AND THE NEW YORK FED FOUND HOUSEHOLD SPENDING ROSE 4 POINT 5 PERCENT IN APRIL COMPARED TO THE SAME TIME LAST YEAR.
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