CNN
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It’s easy for Americans to think President Donald Trump’s aluminum and steel tariffs won’t affect them. Most of us aren’t shopping for raw metals, after all. Yet the 25% tariffs rolled out on Wednesday could still manage to dent consumers’ wallets.
From cans for food, beer and soda to cars and much, much more, steel and aluminum are used in innumerable consumer products. And much of that steel and aluminum comes from abroad, which means companies could pass on the cost of tariffs to American shoppers.
While it’s still too early for CEOs to say exactly how the tariffs will change their cost structures and, as a result, the prices they charge customers, several have already warned price hikes could soon follow.
Campbell’s Company CEO Mick Beekhuizen said the food and beverage maker imports steel from Canada to make cans.
“We’re closely working with our suppliers to mitigate potential impact,” he said on the company’s earnings call this month. “At the same time, depending on how long these tariffs would be in place as well as the extent of the tariffs, we might need to take other actions.” That, he said, could lead to a review of “pricing for some of our products.”
(Campbell’s declined to share further details with CNN on how the steel and aluminum tariffs could impact consumer prices.)
In some cases, companies could seek alternatives to aluminum or steel for packaging. For instance, Coca-Cola CEO James Quincey said last month that the company is preparing to package more of its products in plastic and glass as opposed to aluminum to avoid the higher input costs if the tariffs were to go into effect.
But he cautioned outsiders may be “exaggerating the impact of the 25% increase in the aluminum price relative to the total system. It’s not insignificant, but it’s not going to radically change a multibillion dollar US business.” Still, Quincey said, “It would be better not to have (the tariff).”
A single car can contain hundreds, if not thousands, of pounds of steel and aluminum.
But, for the immediate future, car manufacturers may be insulated from the tariffs because they often lock rates in multi-year contracts.
For instance, General Motors chief financial officer Paul Jacobson said on the automaker’s earnings call last month that a significant amount of the steel it sources, which is primarily made in the US, is priced at relatively fixed rates for a few years. However, GM isn’t shielded from market spikes in commodity prices because of the tariffs, he said. “There’s probably going to be an increase in costs related to market prices, but that should subside over time.”
Appliances, such as refrigerators, HVAC systems, washing machines and dryers, also require significant amounts of steel and aluminum and could become more expensive as a result of the tariffs.
Whirlpool senior vice president controller Roxanne Warner said recently that the majority of the company’s raw materials, such as steel, have “locked-in contracts for a minimum of one year.”
“We also believe that given that we are producing 80% of what we sell in the US… that we are in a pretty good position (with regard to tariffs),” she added, speaking at a Raymond James investor conference this month.
At the same time, when Trump slapped a 25% tariff on steel and a 10% tariff on aluminum in 2018 with some exceptions, Whirlpool reported that it saw prices of raw materials surge, raising its costs by $350 million.
“Approximately 96% of the steel used in our US factories is sourced from domestic suppliers,” a Whirlpool spokesperson told CNN in an emailed statement. “Still, we understand there will be implications, and we will be evaluating the overall impact relative to the recent US trade decisions and any further actions by its trade partners.”
Whirlpool did not respond to CNN’s question about whether the share of US steel it uses has changed since 2018. It also did not specify the share of US aluminum used in products manufactured in the US.
Water filtration systems are built using those metals, meaning even tap water could get more expensive as a result of the tariffs.
John Stauch, the CEO of Pentair, a water treatment company that manufactures municipal equipment used to deliver potable water to homes and businesses, said the company purchases $100 million worth of aluminum and steel from outside the US.
Additionally, Stauch said Pentair purchases $125 million worth of components from China, where non-steel or aluminum goods coming to the US are already being tariffed at 20%. So in total, the tariffs currently in place are costing them $50 million, he said.
“Effective April 1 and April 15, we’re planning to go with price increases across the businesses,” he said at a JPMorgan industry conference on Tuesday.
As water filtration costs rise, providers could pass along the price to consumers by billing them higher rates.
“I’m guessing we’re generally all in the same playing field,” Stauch added, referring to water filtration competitors. “Generally, what we’d be doing is across-the-board price increases, and therefore working to sell the product that we can make the most amount of profit for.”
