Donald Trump’s threat to impose a 25 percent across the board import tariff on steel, not to mention the 10 percent on aluminium, is already adding to recent steel price increases, and is set to push steel prices in the USA way beyond levels seen for some time.
Equipment manufacturers producing products where steel is a major component – such as cranes, telehandlers and large aerial lifts, are of course unable to absorb the likely price increases and are already drawing up plans to pass this on to their customers.
Terex is the first company to publicly state its plans which will include a steel surcharge which is transparent and separate from the base cost of the crane. Its chief executive John Garrison issued a public letter to the company’s customers yesterday which is published in full below:
Dear Valued Terex Cranes Customer,
As you have undoubtedly heard, on March 1, 2018 the Trump administration announced its intention to impose tariffs on imported steel and aluminum. Steel prices have been rising steadily for several months, and this action drove prices even higher, reaching heights not seen in many years. The longer term impact of the trade action is uncertain, but the inflationary impact on steel prices and related components is already increasing our product cost.
Terex is committed to continuously improving efficiency, managing costs, and when possible protecting our customers from the adverse impacts of rising costs – to help maximize the value and return on investment derived from our products. Unfortunately, the impact of the rising cost of steel is too large and too sudden for us to absorb.
Given the uncertain nature of these market dynamics, we are not increasing our base prices. Instead, we will be adding a steel cost surcharge on our equipment.
The surcharge will cover a portion of our cost increases – and will remain separate and transparent from our base prices. As the price of steel normalizes, we will adjust or remove the surcharge. Our aim is to minimize the impact on your business. We are still finalizing the details of the surcharge – your Terex representative will communicate with you very soon.
We regret that we have been forced to take this action. As a global manufacturer, we value free and fair markets, and see the imposition of these tariffs as a significant source of friction in the global economy.
It is particularly frustrating to have these added costs imposed now, creating unnecessary headwinds at a time when markets are trending favorably.
Thank you for your business; we look forward to continuing to serve you.
President & CEO