The latest shifts in U.S. trade policy are making waves across the industrial landscape, particularly within the conveyance sector and equipment manufacturing space. With new tariffs imposed and adjusted, now is the time for business leaders to assess the implications and recalibrate strategies to ensure resilience, profitability, and long-term growth.
According to the U.S. Census Bureau, U.S. manufacturing for material handling equipment is a significant industry – contributing approximately $47.5 billion to the U.S. economy. Much of the growth in this sector is attributed to the growing number of fulfillment centers and Third-Party-Logistics (3PL) warehouses that support eCommerce. So, what are the impacts of recent tariffs to conveyor and equipment manufacturers?
The conveyance industry relies heavily on steel and aluminum, materials often sourced internationally. Steel is much stronger than aluminum and holds up better to compression, tension and shear. Aluminum is roughly one-third of the weight of steel and has a higher strength-to-weight ratio. In 2023, U.S. steel imports totaled $33.15 billion, with leading suppliers including Canada, Brazil, Mexico, South Korea, and Vietnam (US Steel Import Data). Aluminum usage is similar, with $28.29 billion in imports. Primary sources included Canada, the United Arab Emirates, and Russia, underscoring the global nature of our materials supply chain (US Aluminum Imports).
The current tariff on imported steel and aluminum is 25%. This tariff was also imposed on steel from major exporters to the U.S. in 2018. Negotiations followed and exemptions were granted to four of the five (Vietnam was still subject to the 25% tariff on steel). Conversely, the impact on aluminum is a steep climb from the 10% tariff imposed in 2018.
These policy shifts introduce a new cost landscape and force a rethink of sourcing and pricing strategies. Raising tariffs on raw materials such as steel and aluminum could drive up production costs, impacting both direct margins and project bids. With China seeing a substantial increase in tariffs, manufacturers may look to domestic suppliers or countries not affected by increased duties. Additionally, countries are already beginning to react with countermeasures to U.S. tariffs.
How can companies mitigate the risks in these uncertain times? First, build deeper relationships with U.S.-based material producers to buffer against international policy shifts. Second, explore innovations in material science and manufacturing techniques that reduce reliance on heavily taxed imports. Finally, stay ahead of legislative changes and participate in industry advocacy to ensure that policy evolves with market realities.
Tariff changes present both challenges and opportunities. The path forward is one of strategic agility and high expectations. At NorthAmCon we will accomplish this by aligning actions with our core values—dedication, stewardship, and continuous improvement—to ensure that our conveyance businesses remain not only competitive, but a leader in an evolving global marketplace.
