The Effect of U.S. Tariffs on Fluid Power Industries

In March, President Donald Trump announced the imposition of tariffs of 25 percent on steel and 10 percent on aluminum. The argument was that the tariffs would be vital to helping reduce America’s trade deficit. While the jury is still out on how these tariffs will affect the economy over the long term, there are some observable and predicted effects on particular industries, including fluid power industries.

Here’s some information about this from a hydraulic service in Minnesota.

Effects on the pumping industry

When the news first broke that the tariffs would be going into effect on March 23 after being announced March 8, leaders in the fluid power and pumping industries had to quickly consider questions such as:

  • Will countries beyond just Canada and Mexico be excluded from the tariffs?
  • What will other countries do in retaliation for the imposition of these tariffs?

The initial action taken by the Trump administration seemed to be directed at China and other Asian countries, but only about 10 percent of American steel imports actually come from China. (Both China and Japan mentioned strong opposition to the imposition of these imports.)

The majority of pump construction happens outside of the United States. Many pump manufacturers source their casings outside of the United States as well, so companies in the fluid power and pumping industries could expect to see some negative impacts from the increased prices caused by tariffs.

It was also not clear at first what all the tariffs would cover in relation to the hydraulic industry. The impact to production might not be significant if the tariff only affected bar stock and rolled products, but it could be significant if it also affected scrap metals, raw pellets and any other materials used in the casting process.

There was also the possibility that the tariffs could result in some pump manufacturers becoming less competitive or attractive to foreign brands. Those in the industry were encouraged to start looking at domestic suppliers for their parts, though of course, a significant amount of steel comes from outside the United States, so the supply may or may not be able to handle the sudden increase in demand that results from these tariffs.

On a worldwide level, there is also an increasing global demand in hydraulic power systems to consider. Hydraulic power is becoming a cornerstone of power systems in many industries, and these tariffs will have an impact on the ability to manufacture and deliver them.

It remains to be seen whether there will be financial benefits that result from these tariffs or not—the big thing to consider is that there will certainly be effects on the industry. It will take some time for us to truly be able to judge whether those effects are positive or negative.

If you’re interested in learning more about the effects of tariffs on the hydraulic industry, we encourage you to contact M & M Hydraulic Company to discuss hydraulic service in Minnesota. Reach out to us today!

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