Tool-steel companies and mold makers are fighting tariffs on steel imposed in March by the U.S. government, saying the law is affecting the launch of new steel grades and could lead to a similar law later this year in Canada.
The tariffs, announced March 5, specifically exempt tool steels but add an import fee on some steel alloys and stainless-steel grades made overseas and shipped to the United States.
The tariffs can add 15-30 percent to the price of some types of steel sold to U.S. mold makers. The law is counterproductive for companies and confusing to follow, said Michael Renk, sales manager for export tool steels with Edelstahlwerke Buderus AG, a large steel producer based in Wetzlar, Germany.
``It all depends on chemistry - what is exempted and what isn't,'' Renk said. ``Some are classified as tool steels and some others are alloys. It has meant that some new steels now selling in Europe are not being sold in North America.''
Several steel manufacturers exhibiting April 24-25 at Mold Making 2002 in Rosemont said the tariffs have thwarted the launch of specialty steel grades in the United States. Those grades, introduced as replacements for existing tool materials, are being held up in U.S. distribution while the suppliers battle the government for exemptions from the tariff.
Buderus is working to gain an exemption for its Thruhard steel grade, used in large automotive molds due to its hardness and flexibility, Renk said. The steel is classified as an alloy and subject to a 30 percent import duty when sold in the United States, he said.
Meanwhile, the P20 steel grade that Thruhard is designed to replace also might fall under the same duties, Renk said. So far, though, the government has not specified whether P20 is affected.
Officials with P20 producer BÃ¶hler-Uddeholm Corp. said at the show that prices have remained stable. But eventually all prices, for both imported and domestic products, could be affected, said technical sales manager Russell Vardy, based in Mississauga, Ontario.
``We're expecting to see prices rise somewhere down the line,'' Vardy said. ``We don't know what impact the tariffs will have.''
The duties could take as long as six months before going into effect - they kick in depending on the available steel inventory in the United States - so toolmakers might not see a price increase until this fall, Renk said.
Stainless steel, used for mold bases and many optical molds, is subject to a 15 percent import duty under the same law.
Other producers face similar battles. International Mold Steel Inc., a Florence, Ky.-based distributor of overseas steels, originally believed that its products would be exempted, said Executive Vice President Thomas Schade.
But now the firm has found that its Porcerax steel, a specialty grade made in Japan, falls under the government's definition of stainless steel, Schade said. The steel already is used extensively by U.S. toolmakers to make molds for speaker grilles, thin-wall parts and other components.
While Schade seeks a government exemption for Porcerax, he said problems could multiply once other countries enact similar tariffs.
``It seems like this law is becoming like a snowball moving downhill,'' Schade said. ``Everyone in the [tooling] industry will be hurt by it eventually.''
Canada might get in the act. The federal government is considering a similar tariff affecting imported molds from overseas, said Louis Papp, industrial strategist for the Canadian Association of Moldmakers in Windsor, Ontario.
The Canadian International Trade Tribunal is conducting a review of a proposed law before deciding on its tariff by August, Papp said. Steel shipped from the United States, a North American Free Trade Agreement partner, would not be included in the tariff.
Right now the draft version of the Canadian tariff would not exempt tool steel, Papp said. CAM is working with other associations in Canada to lobby the government to exclude tool steels or drop the law entirely, he said.
``We're ready for depositions now,'' Papp said at the show. ``We think the [Canadian government] put tool steels in there by mistake. [If the proposal does not change], it will seriously limit our ability to compete in Canada.''
Canadian toolmakers, like their counterparts in the United States, already face severe profit margin pressures, added Darcy Urquhart, sales manager of Cavalier Tool & Manufacturing Ltd. of Windsor. The battle to keep a profit margin could be reduced further by government bureaucracy, he said.
``We have to make a living.''