25% steel tariff impact on frame builders?

[Gsinill]

I guess it kind of sucks for those that make a living of frame building given the already low margins...

[David Kirk]

Any builder who wants to keep the lights on will pass that cost on and it's the consumer that will end up paying it.

dave

[duff_duffy]

Think this affects titanium too? Heard steel and aluminum....just wondering!

[tuscanyswe]

Wonder where this will end. No where good is my guess.

[eddief]

in the past, trade wars have led to cold wars and then to hot wars...among bike companies.

[Mark McM]

It depends on how the tariffs are structured. They could be aimed at specific countries (where do steel frame tubes come from?), and it could depend on how bicycle tubing is classified. For example, the tariff would probably be on raw goods, not finished goods (which is not to say there couldn't be a different tariff on finished goods). Are bicycle frame tubes merely raw goods? Or are they finished goods, because they are processed specifically for one unique application?

As far as passing it on to consumers - while that is certainly a possibility, it would reduce the competitiveness of steel frames vs. other frames from other materials. Surely, steel frame builders would stand to lose some amount of market share to builders who use other materials.

[rnhood]

It depends on how the tariffs are structured. They could be aimed at specific countries (where do steel frame tubes come from?), and it could depend on how bicycle tubing is classified. For example, the tariff would probably be on raw goods, not finished goods (which is not to say there couldn't be a different tariff on finished goods). Are bicycle frame tubes merely raw goods? Or are they finished goods, because they are processed specifically for one unique application?

As far as passing it on to consumers - while that is certainly a possibility, it would reduce the competitiveness of steel frames vs. other frames from other materials. Surely, steel frame builders would stand to lose some amount of market share to builders who use other materials.

I think this sums it up pretty well. As with most news flashing across the wire, we often overreact. People preach doom and gloom, the stock market dives, then a week later we will probably be setting new records again.

[bicycletricycle]

trade wars always work out great, this should be fun.

[C40_guy]

As far as passing it on to consumers - while that is certainly a possibility, it would reduce the competitiveness of steel frames vs. other frames from other materials. Surely, steel frame builders would stand to lose some amount of market share to builders who use other materials.

According to Dr. Google, steel prices are currently in the range of around $400 per ton. If my basic math skills are still good, that translates to about $.20 per pound, or maybe $1 for raw goods for a steel frame.

If tariffs push that cost of raw goods up 30%, I think there's some room in the cost of the finish good to cover the delta...

[Kontact]

We're all richer because we got a tax break to pay for more expensive goods, right?



But there is no reason a $3000 frame is going to get 25% more expensive because $200 worth of tubes went up in price.

[skiezo]

At work we a doing a decent size(460 feet) stainless steel 16" pipe job with about 120 SS hangers. I was told today that the price quoted a few day ago is subject to change on a 24 hour basis by as much as 30% over what we were quote at the beginning of the week. That is a chunk of change over the quote that we submitted.

[C40_guy]

We're all richer because we got a tax break to pay for more expensive goods, right?

But there is no reason a $3000 frame is going to get 25% more expensive because $200 worth of tubes went up in price.

I believe the proposed tariff targets raw goods, rather than tubing sets (or golf clubs)...

[e-RICHIE]

I guess it kind of sucks for those that make a living of frame building given the already low margins...


I don't see the connection. It's like any other COL line item (insurance, the price of drill bits, a booth at PBE, or even promotion), it's part of the job, and the job includes finding a way to roll with it and move on. If a trade person has an already low margin (I can't imagine why that would be) then it's his problem, one he's already created and most likely used to living with.

[Kontact]

I believe the proposed tariff targets raw goods, rather than tubing sets (or golf clubs)...

Yup. And that's going to make tubing more expensive. What I was pointing out was that the cost of a high end frame is primarily labor, not materials.

[josephr]

I think the impact on the bicycle market would be minimal....in our use of the bike, its sort of a luxury item. The real price increase in materials will be minimal compared to the cost of forging a specialized metallurgy and special tooling required to draw up spec'd tubesets. You may have to pay another $15 for a $1250 Gunnar? Sorry...its a non-issue when it comes to bikes.

The real benefit here is your roadsides as bringing the cost of imports will bring back the recycling market --- hopefully we'll see a decrease in waste thru increased in recycling. If our current administration REALLY wanted to influence international markets, he'd impose TARIFFS on PLASTICS.

[Gsinill]

Any builder who wants to keep the lights on will pass that cost on and it's the consumer that will end up paying it.

dave

I don't see the connection. It's like any other COL line item (insurance, the price of drill bits, a booth at PBE, or even promotion), it's part of the job, and the job includes finding a way to roll with it and move on. If a trade person has an already low margin (I can't imagine why that would be) then it's his problem, one he's already created and most likely used to living with.

I would assume margin and ability to pass the additional cost on to the consumer are closely tied to the reputation of the builder.

[e-RICHIE]

I would assume margin and ability to pass the additional cost on to the consumer are closely tied to the reputation of the builder.

I think it's tied to his commitment to making a living in his chosen trade.

[cadence90]

I think it's tied to his commitment to making a living in his chosen trade.

Precisely.
.

[jimcav]

According to Dr. Google, steel prices are currently in the range of around $400 per ton. If my basic math skills are still good, that translates to about $.20 per pound, or maybe $1 for raw goods for a steel frame.

If tariffs push that cost of raw goods up 30%, I think there's some room in the cost of the finish good to cover the delta...

with 3 cents worth of steel, so that only goes up by less than a cent! I don't buy soup, but may be in the market for a truck next year for a car when i let my oldest drive my truck--not sure how much it will matter then...hopefully it will be a 2-3 yr old truck under warranty and unaffected by tariff battles

[Kontact]

with 3 cents worth of steel, so that only goes up by less than a cent! I don't buy soup, but may be in the market for a truck next year for a car when i let my oldest drive my truck--not sure how much it will matter then...hopefully it will be a 2-3 yr old truck under warranty and unaffected by tariff battles

The problem is that mark-ups are always in percent, so a 30% increase in steel may mean that the tube maker marks up their tubing by a number that reflects the total cost x a given percent margin, then the distributor does the same, then the bike builder does, then the shop, etc.


Many consumer items are doubled at every level of their journey from factory to consumer, which is how a shirt that cost $6 to make ends up being $80 on the hanger - because every middleman expects to making the same percentage of their investment.

[Cicli]

First world problems. Whining about the tariff on the steel in a bike frame. Most people couldn't imagine spending even the amount the price could go up on a bike frame. Much less the 3k or more many spend.
I am in the trucking industry. A new Kenworth tractor we sold today (at sticker) was 162,990. The guy traded in an old one and wrote a check for the balance. I doubt he was worried about the future price of a 9 ton truck because of the tariff. He hauls steel BTW.

[eddief]

carbon is the answer.

[unterhausen]

tubes are finished goods, so framebuilders will not being paid more for steel for the most part

[Tony T]

It will be more of an issue to beer drinkers as most beers are sold in aluminum cans. I read that it could push the cost of a 6-pack up by 6¢
;)

[jimcav]

The problem is that mark-ups are always in percent, so a 30% increase in steel may mean that the tube maker marks up their tubing by a number that reflects the total cost x a given percent margin, then the distributor does the same, then the bike builder does, then the shop, etc.


Many consumer items are doubled at every level of their journey from factory to consumer, which is how a shirt that cost $6 to make ends up being $80 on the hanger - because every middleman expects to making the same percentage of their investment.

I remember almost 2 decades ago when energy prices went up, the local restaurants raised prices, and by more than the % of energy cost increase, after the energy issue mostly resolved, prices never went back down, they only went up from there. Maybe competition in this case will keep price honest if the raw goods prices fall back again

[oldpotatoe]

I guess it kind of sucks for those that make a living of frame building given the already low margins...

Kinda depends on whether these will actually happen. More than a few ? about the legality of it based on the 'national security' aspect of it(Canada largest steel exporter to the US..Canada). Might have been a reaction to somebody having a really bad week, and once again, speaking to the immediate audience ala DACA and gun control.

[Gsinill]

Kinda depends on whether these will actually happen. More than a few ? about the legality of it based on the 'national security' aspect of it(Canada largest steel exporter to the US..Canada). Might have been a reaction to somebody having a really bad week, and once again, speaking to the immediate audience ala DACA and gun control.

Yep, looks like there is already some "friendly fire"...

[ultraman6970]

If busted steel frames go up at ebay then we know the reason now :)

[bobswire]

And what about the 900 lb elephant, the NRA, and Gun Industry in the production of guns. Who needs boycotts when you can tariff them to death. Yay! :hello:

[MikeD]

Kinda depends on whether these will actually happen. More than a few ? about the legality of it based on the 'national security' aspect of it(Canada largest steel exporter to the US..Canada). Might have been a reaction to somebody having a really bad week, and once again, speaking to the immediate audience ala DACA and gun control.



Oldpotootie, aren't you old enough to remember the material shortages in WWII? Steel is a strategic material. Ships, tanks, and trucks are built with it.

[tuscanyswe]

Oldpotootie, aren't you old enough to remember the material shortages in WWII? Steel is a strategic material. Ships, tanks, and trucks are built with it.

Wouldent it then be better to import it so you can then have a bigger stockpile if case of "emergency"

[MikeD]

Wouldent it then be better to import it so you can then have a bigger stockpile if case of "emergency"


Stockpile what, exactly? That's almost an impossible and ridiculously costly task. Steel is not a raw material. It's made from iron and small amounts of alloying elements, then it's formed into billetts, plates, bars and various shapes, and a dizzying array of alloys and heat treatments. Then it's machined, welded, and so on into a final product. If all the steel mills are gone, how do you make the specific steel product? It's like having a strategic petroleum reserve and no refineries to make oil into gasoline and diesel. In times of war, should we depend on a foreign country for our needs, which have their own priorities, even if they are an ally?

[oldpotatoe]

Oldpotootie, aren't you old enough to remember the material shortages in WWII? Steel is a strategic material. Ships, tanks, and trucks are built with it.

Ahhhh, no. Born in 1951. Regardless, I don’t think steel sourced from Canada or not is a matter of ‘national security’. A 25% tariff on foreign steel(and 10% on aluminum) will not ‘save American jobs’, it will cost jobs as people don’t spend as much(higher prices) and those companies produce less. It’s knee jerk, ill advised and will do nothing to help anybody, except those who got insider trading info and dumped stock in companies that use a lot of steel and aluminum, prior to this ‘for TV’ announcement.

[tuscanyswe]

Stockpile what, exactly? That's almost an impossible and ridiculously costly task. Steel is not a raw material. It's made from iron and small amounts of alloying elements, then it's formed into billetts, plates, bars and various shapes, and a dizzying array of alloys and heat treatments. Then it's machined, welded, and so on into a final product. If all the steel mills are gone, how do you make the specific steel product? It's like having a strategic petroleum reserve and no refineries to make oil into gasoline and diesel. In times of war, should we depend on a foreign country for our needs, which have their own priorities, even if they are an ally?

Why would the mills be gone be keeping status quo
The army is only requiring small pirce of US production of steel. And until its fend for yourself (which hopefully is a very long time away) wouldent US tanks and other war equipment just be more expensive with new tariffs then previously?

Not to mention potential counter measures from "allied" nations that would potentially be loosing money and jobs from the same tariffs.

[MikeD]

Ahhhh, no. Born in 1951. Regardless, I don’t think steel sourced from Canada or not is a matter of ‘national security’. A 25% tariff on foreign steel(and 10% on aluminum) will not ‘save American jobs’, it will cost jobs as people don’t spend as much(higher prices) and those companies produce less. It’s knee jerk, ill advised and will do nothing to help anybody, except those who got insider trading info and dumped stock in companies that use a lot of steel and aluminum, prior to this ‘for TV’ announcement.


These tariffs aren't a done deal yet and perhaps Canada will be excluded. I think all countries are included though because it's been a proven way to get around tariffs by funneling product through countries not subject to the tariff. That's the reasons given in the recent solar panel tariff, I think.

I went to college near Bethlehem Steel. Some of my classmates got hired there. That business is long gone. Billy Joel wrote a song about it called Allentown. It's not just the loss of jobs, but an entire industry critical to national security may go away due to dumping and other unfair trade practices by foreign countries. It's about time the government woke up and tried to protect this industry and others. We built China up into the economic power it is today. They are on their way to being a military superpower too. Think about that.

[cadence90]

Ahhhh, no. Born in 1951. Regardless, I don’t think steel sourced from Canada or not is a matter of ‘national security’. A 25% tariff on foreign steel(and 10% on aluminum) will not ‘save American jobs’, it will cost jobs as people don’t spend as much(higher prices) and those companies produce less. It’s knee jerk, ill advised and will do nothing to help anybody, except those who got insider trading info and dumped stock in companies that use a lot of steel and aluminum, prior to this ‘for TV’ announcement.
Hey, look on the bright side. The savings on the "completely coinkidinkally" dumped $31.3 million means he won't have to fret over those pesky $45 LBS consulting fees anymore, and might even be able afford to bring the fellas a 6-pack or two of Coors Banquet....

:rolleyes:
.

[Red Tornado]

I'm a manufacturing engineer and the tooling/raw material buyer for our department told me yesterday he's already receiving letters from some of our tooling vendors that costs/lead times could be going up. The problem we face in our business is the selling prices negotiated with customers for our finished products run through contract cycles and it's not always easy, or sometimes possible, to get increases. So we can't just pass the extra costs on down the line as easy as our vendors might do to us. Will be interesting to see how this all shakes out.

[ripvanrando]

The river valleys of the Lehigh, Ohio, Monongahela, and the Youghiogheny were once nothing much more than steel mill after mill after mill. Those days are so far gone that I just can't quite understand this 25% tariff.

How will this bring steel back?

Hasn't steel been gone for 40-45 years?

Do we want it back? I remember not being able to see across the valley to the other side of the Youghiogheny River and being covered in black soot from playing outside. The sky was orange and I don't remember ever seeing the sun. China can have that as far as I am concerned.

[BobbyJones]

Like others said, the material cost is usually the least expensive part of manufacture, labor being most expensive.

For kicks, i did the basic math to see what an extra 25% looks like (at the raw goods level) for the structural steel of One World Trade Center in NYC. If I did the math right, it's about $5 million. A drop in the bucket of the $3.8 + billion overall cost.

[oldpotatoe]

These tariffs aren't a done deal yet and perhaps Canada will be excluded. I think all countries are included though because it's been a proven way to get around tariffs by funneling product through countries not subject to the tariff. That's the reasons given in the recent solar panel tariff, I think.

I went to college near Bethlehem Steel. Some of my classmates got hired there. That business is long gone. Billy Joel wrote a song about it called Allentown. It's not just the loss of jobs, but an entire industry critical to national security may go away due to dumping and other unfair trade practices by foreign countries. It's about time the government woke up and tried to protect this industry and others. We built China up into the economic power it is today. They are on their way to being a military superpower too. Think about that.

Automation had more to do with job loss than the Chinese. The steel industry has been in decline for decades because of this. A trade war will be born on the backs of you and me..it will reduce jobs, not increase them. Don't expect this knee jerk reaction to see steel mills opening up around Allentown. BUT is this TV moment aimed at anybody? Pennsylvania...2020 is closer than you think.

Having been in the military for 20 years, I kinda have 'thought about that'. OBTW, the US spends more on defense than the other top 7 countries..COMBINED.

Think about this.

The top supplier to the U.S. in 2017 was Canada, followed by Brazil, South Korea, Mexico and Russia. Other notables include Turkey, Japan and Taiwan. China is just outside the list at No. 11 despite producing about half of the world’s steel. Barack Obama is the only recent president not to impose broad tariffs, but he did put significant restrictions on Chinese steel.

[MikeD]

Automation had more to do with job loss than the Chinese. The steel industry has been in decline for decades because of this. A trade war will be born on the backs of you and me..it will reduce jobs, not increase them. Don't expect this knee jerk reaction to see steel mills opening up around Allentown. BUT is this TV moment aimed at anybody? Pennsylvania...2020 is closer than you think.

Having been in the military for 20 years, I kinda have 'thought about that'. OBTW, the US spends more on defense than the other top 7 countries..COMBINED.

Think about this.


A defense dollar goes way farther in China and Russia than here. Russia is developing new nuclear weapons. How many military servicemen does Russia and China have vs. us?

A trade war will hurt foreign countries way more than us because we import way more than we export. This is a nothing burger.

[oldpotatoe]

A defense dollar goes way farther in China and Russia than here. Russia is developing new nuclear weapons. How many military servicemen does Russia and China have vs. us?

A trade war will hurt foreign countries way more than us because we import way more than we export. This is a nothing burger.

The above 2 paragraphs make little sense. We make imported goods more expensive. A tariff is like a new tax, on US consumers. Our exports will become more expensive, less made and sold, people will lose their jobs. Nobody wins in trade wars.

[ripvanrando]

A defense dollar goes way farther in China and Russia than here. Russia is developing new nuclear weapons. How many military servicemen does Russia and China have vs. us?

A trade war will hurt foreign countries way more than us because we import way more than we export. This is a nothing burger.

There are approximately 25 million Veterans of whom half own a firearm. It would take Nukes to overpower the USA because there would indeed or at least nearly so a rifle behind every blade of grass.

WRT steel mills, I can't imagine a company making the investment to put one here. The environmental constraints in the USA alone make it far cheaper to pollute China and exploit cheap labor.

[Red Tornado]

I'm a manufacturing engineer and the tooling/raw material buyer for our department told me yesterday he's already receiving letters from some of our tooling vendors that costs/lead times could be going up. The problem we face in our business is the selling prices negotiated with customers for our finished products run through contract cycles and it's not always easy, or sometimes possible, to get increases. So we can't just pass the extra costs on down the line as easy as our vendors might do to us. Will be interesting to see how this all shakes out.
We buy most our raw material (steel) from U.S. companies and the prices they charge us are fixed for the length of the contract, or supposed to be. The variable for us will be the cost increases for the tooling we use in our machines. No contracts with our tooling vendors and they can bump their prices up as much as they want within reason. Realize the material cost, even with tool steel, is a relatively small percentage of total cost. However we use a lot of big tools in our equipment and even a small'ish increase could result in a significant increase to tooling budgets. Something we unfortunately can't pass on to our customers,so it eats into profits.
I'm all for increasing manufacturing in the U.S., but the steel industry is a shell of what it used to be. A big move vs. slower, measured increases could hurt more than it helps.

[MikeD]

The above 2 paragraphs make little sense. We make imported goods more expensive. A tariff is like a new tax, on US consumers. Our exports will become more expensive, less made and sold, people will lose their jobs. Nobody wins in trade wars.


Has there ever been a trade war, besides the Civil War? I don't remember any. I think this is all chicken little FUD BS.

The US is addicted to cheap foreign product to the detriment of the country like a drug addict is addicted to crack cocaine. Read this http://www.nytimes.com/2011/06/26/business/global/26bridge.html

Maybe I should buy my bikes online, it's cheaper. Who cares if it puts struggling bike shops out of business? That's the logical extension of the free market BS being spewed in this thread.

Read up on the mini mill, if you think steel is dead in this country http://www.nytimes.com/1981/09/23/business/the-rise-of-mini-steel-mills.html

Think your job can't be outsourced? Think again.

[dave thompson]

Ahhhh, no. Born in 1951. Regardless, I don’t think steel sourced from Canada or not is a matter of ‘national security’. A 25% tariff on foreign steel(and 10% on aluminum) will not ‘save American jobs’, it will cost jobs as people don’t spend as much(higher prices) and those companies produce less. It’s knee jerk, ill advised and will do nothing to help anybody, except those who got insider trading info and dumped stock in companies that use a lot of steel and aluminum, prior to this ‘for TV’ announcement.

[X] like

[unterhausen]

The river valleys of the Lehigh, Ohio, Monongahela, and the Youghiogheny were once nothing much more than steel mill after mill after mill.

Do we want it back? I remember not being able to see across the valley to the other side of the Youghiogheny River and being covered in black soot from playing outside. The sky was orange and I don't remember ever seeing the sun. China can have that as far as I am concerned.
Those plants were taking iron ore and making them into steel. We get similar volumes now from plants that are taking used steel and turning it back into new steel. Steel scrap is so cheap I don't understand why the metal pickers still take it when I leave it out on the street.

I really think you are right, we don't want this capability back. And we don't need much of it anyway. The plants making steel in this country are at 75% capacity, I'm sure we can do without any of the old mills coming back online. Funny thing is, China is waking up to the fact that they don't want pollution either.

[54ny77]

I truly wish the current administration would bring things down to an understandable level to the populace.

For example, go price out a U.S. car in China.

Generally, it's about double the domestic price due to TARIFFS. From the Chinese gov't. Yes, the gov't.

Fair trade?

Hardly.

Finally, a trade negotiator, which happens to be the President, with some cajones for calling a spade a spade.

[ripvanrando]

Those plants were taking iron ore and making them into steel. We get similar volumes now from plants that are taking used steel and turning it back into new steel. Steel scrap is so cheap I don't understand why the metal pickers still take it when I leave it out on the street.

I really think you are right, we don't want this capability back. And we don't need much of it anyway. The plants making steel in this country are at 75% capacity, I'm sure we can do without any of the old mills coming back online. Funny thing is, China is waking up to the fact that they don't want pollution either. I have two sets of heavy brake rotors and front control arms that SHOULD be recycled but you are right on the price thing, it just isn't worth my time or fuel to drive it to a recycle location. My problem with government interference with the market is the resultant consequences that are hard to predict as Mr. Market is fickle.

Trump posits this as a national security measure. How can we be a country if we don't make steel. How can we feed the war machinery if we don't have steel mills. These populist messages sell.

OTOH....reciprocity is an essential element of any fair relationship. They're screwing us but we let them. Trump is trying to level the playing field.

I have outsourced so many medical and pharmaceutical products to other countries over the decades. Billions. It still bothers me that we as a country have given our intellectual capital away. Why? Regulatory burden, lower corporate taxes, and of course, labor costs. The Labor cost and productivity equations were all driven by the St. Louis Fed. The trade deals were just icing on the cake. Trump is 20+ years too late.

China got intellectual capital, growth, and the pollution in exchange for questionable debt instruments over which war will rage one day.

I think I need to recycle my steel for the country. But where.

[unterhausen]

I think our recycling pickup would be ok with brake rotors. My machining chips, not a chance. We have pickers that drive around looking for metal junk, as long as I don't leave it out on trash day. And barring that, I have a friend whose father recycles metal.

[oldpotatoe]

Has there ever been a trade war, besides the Civil War? I don't remember any. I think this is all chicken little FUD BS.

The US is addicted to cheap foreign product to the detriment of the country like a drug addict is addicted to crack cocaine. Read this http://www.nytimes.com/2011/06/26/business/global/26bridge.html

Maybe I should buy my bikes online, it's cheaper. Who cares if it puts struggling bike shops out of business? That's the logical extension of the free market BS being spewed in this thread.

Read up on the mini mill, if you think steel is dead in this country http://www.nytimes.com/1981/09/23/business/the-rise-of-mini-steel-mills.html

Think your job can't be outsourced? Think again.

I'm retired:).

Those goods are cheap because that laborer makes about 1/10 of the american worker. Until that US gent, who belongs to a union, stops making $40-$50 an hour, don't expect US manufacturing to be on par with Asia.

I didn't say steel is dead, you did. I said people working in steel mills are fewer today mostly because of automation, like in a lot of manufacturing.


America's last trade war exacerbated the Great Depression in the 1930s, when unemployment rose to 25%. Claiming it was protecting American jobs, Congress passed the Smoot-Hawley Act in 1930. The original bill was meant to protect farmers. But to build political support, many lawmakers asked for tariffs -- or taxes -- on all sorts of goods in exchange for their vote.Several nations, such as Canada, slapped steep tariffs -- or taxes -- on US goods shipped and sold abroad. For example, US exports of eggs to Canada fell to 7,900 in 1932 from 919,000 in 1929, according to Doug Irwin, a Dartmouth professor and former trade adviser to President Reagan.
The result: US imports fell 40% in the two years after Smoot-Hawley. Banks shuttered. Unemployment shot up. Surely, there were a litany of factors at play. But economists widely agree Smoot-Hawley made the Great Depression much worse than otherwise.

[GParkes]

It will be more of an issue to beer drinkers as most beers are sold in aluminum cans. I read that it could push the cost of a 6-pack up by 6¢
;)

The best beers come in bottles. Thank you Allagash 😁