BUILD

DIFFERENTLY

Tariffs & Trade Issues | Will They Impact How You Design?
Tabitha Stine | Brian Raff
Friday, March 23, 2018
American Institute of Steel Construction
Provider Number: G295

Tariffs & Trade Issues

Will They Impact How You Design?
Course Number: A900

Tabitha Stine & Brian Raff

Friday, March 23, 2018
Credit(s) earned on completion of this course will be reported to AIA
CES for AIA members. Certificates of Completion for both AIA
members and non-AIA members are available upon request.

This course is registered with AIA CES for continuing professional

education. As such, it does not include content that may be deemed
or construed to be an approval or endorsement by the AIA of any
material of construction or any method or manner of
handling, using, distributing, or dealing in any material or product.
___________________________________________
Questions related to specific materials, methods, and services will be addressed at the conclusion of
this presentation.
Course
Description

With clients and staff both wondering what’s

going on with tariffs, international trade,
and steel, it’s critical that project teams and
designers separate facts from fiction. The
American Institute of Steel Construction will
explain the anticipated impacts of tariffs on
steel and how the structural steel supply chain
for construction may be affected. We’ll
also answer your questions to help you navigate
the project challenges ahead.
Learning
Objectives
At the end of the this course, participants will be able to:

1. Learn the supply chain of structural steel as it relates to the mill, service center,
fabricator, and all associated sub-contractors. This knowledge will allow the architect
to best optimize the project timeline along with inherent advantages structural steel
provides to the project team.

2. Learn the details of the 232 investigation and how the new tariff on raw steel product
may impact your project’s budgets and sustainability when imported product is
utilized.
Learning
Objectives
At the end of the this course, participants will be able to:

4. Learn how best to collaborate with your steel fabricator through early
involvement to best manage the schedule needs on your unique project
while recognizing the benefits of domestically fabricated product.

5. Know where to go for future knowledge on trade issues impacting structural

steel so that the architect can continue to deliver a project with the integrity,
strength and durability that structural steel’s legacy has been built on for
over the last 100 years.
 Photo: NMDA

Who is the American Institute of Steel Construction?

AISC is a not-for-profit and non-partisan trade association and technical institute that represents 1000
companies that fabricate and install the structural steel in America’s great steel bridges, infrastructure
projects, and skylines.

Professional members represent in excess of 30,000 structural engineers and architects

Our Mission Photo: NMDA

AISC is the leading advocate and trusted resource for the American structural steel
industry. Grounded in unsurpassed science, quality, and craftsmanship, this vibrant
and sustainable industry is ever-evolving, ever-improving. That's why for nearly 100
years, AISC has been proud to provide fabricators, engineers, architects, and the
construction industry with breakthrough research and innovative solutions.
We Have The
Capacity John Smith
Title

The domestic steel market (both

production and fabrication) is alive
and well and has more than enough
capacity to meet all of our
construction and infrastructure
needs.

Photo: Joe Aker

 Photo:
Photo:Cesar
Infra-Metals
Rubio

Ready, Willing, and Able

Steel is readily available from the mills and from our service centers/warehouses -- in
fact, our warehouses have about 3 months of supply in stock right now.
 Photo: NMDA

Let’s Compare Apples to Apples

A 25% tariff on steel does not equate to a 25% increase in the cost of the steel
package.
Photo: Lejeune Steel Photo: Gerdau

Photo: NMDA

Steel Tariffs = Structural + Rebar + Others

Any increase in the price of steel impacts all construction -- For example, the rebar
used in concrete construction is similarly affected.
A Lot Has
Happened John Smith Now
Title
Since the Turn of the Century:

[2004] Price volatility for all construction materials

[2006 - 2008] An overheated construction economy

[2008 - 2010] The Great Recession and historic drop in construction activity

[2010 - 2018] A slow rebound back to current construction levels

[2012 - 2017] The challenge of imported material

[2016 - pres.] A tightening labor supply

[2018] Imposition of tariffs on steel and aluminum

Then
Why is AISC Addressing This Issue?
We have a responsibility to our members and to our industry to clarify the issues at hand, and help those
members make the best decisions.
Who is AISC?
Trade association and technical institute that represents 1000 companies that fabricate and install the
structural steel in America’s great steel bridges, infrastructure projects, and skylines.

Professional members which represent in excess of 30,000 structural engineers and architects
Are we speaking the
John Smith
same language?
Title

“Steel” encompasses a variety of

different products and markets
Each individual product category
behaves different in the
marketplace with respect to:

→ Cost Dynamics
→ Availability
→ Production methods
→ Recycling and recovery
rates
→ Distribution channels
Almost every market sector
contributes in some way to our
nation’s security.
Are we Speaking the Same Language?
Structural steel encompasses hot-rolled shapes like wide flange sections, channels
and angles, hollow structural sections (HSS), and plate used to carry loads in
structures.
 ?
Photo: AISC / Modern Steel Construction Photo: Apple

How do we get from molten metal to the Apple Store?

The Steel Supply Chain
Domestic Steel
John Smith
Production Title
Domestically produced
hot-rolled sections are
produced:

→ In steel mills using electric

arc furnaces

→ These mills do not use iron

and coke, but consume steel
scrap to make new steel

→ These mills are located in

Arkansas, Texas, Virginia,
Indiana, South Carolina, and
Louisiana

Photo: AISC / Modern Steel Construction

Domestic Steel
John Smith
Production Title
Hollow structural sections
(HSS) are made by slitting,
forming, and welding coil steel:

→ Hot rolled coil comes from

both EAF mills and
integrated mills

→ These mills are located

throughout the U.S.

Photo: Ron Blunt

Domestic Steel
John Smith
Production Title
Plate steel which is used for
connection material and as the
primary material in bridge
applications:

→ It can originate in both EAF

and integrated mills, but the
majority of plate used in
construction comes from
EAF mills.

→ These mills are located

throughout the U.S.
 Owner

Architect Structural Engineer General Contractor

Architectural Layout Structural Design Construction

Mill Producers From rolling Fabricator Erector

WF, HSS, Tube, etc. Physical Processing At Construction Site

Service Center
Warehouse

Project Supply Chain

The domestic steel production and fabrication industries remain fluid to supply steel for construction

Structural steel can be purchased by a steel fabricator either directly from a producing mill or through a
network of service centers that maintain a local stock of structural steel. Talk with your local fabricator about
current market conditions.
Steel Bridges
Set of players is slightly different for the bridge market, and most bridges use plate rather than wide-flange
sections.

Buy America requirements are still attached to transportation projects that use Federal funding.
BUILD
DIFFERENTLY
Photo: Thornton Tomasetti, Inc.

Tariffs & Trade Issues | Will They Impact How You Design?
It was into this context that President Trump initiated tariffs on importers of steel on March 8, 2018.
What is a 232
John Smith
Investigation?Title
Section 232 of the Trade Expansion Act of 1962

The purpose of the investigation is to determine the

effect of imports on national security

The U.S. Department of Commerce found that steel is

important to U.S. National Security which encompasses
U.S. critical infrastructure sectors including
transportation systems, the electric power grid, water
systems, and energy generation systems.

This is not a congressional or legislative action

Both the Commerce Report and the President’s

proclamation are available online.
The 232 Process
AISC has been working on 232 issues on behalf of our members for a year

May 2017 January 2018 March 2018

AISC testifies DOC submits 3/1 President announces tariff order
report to President 3/8 Exercised authority under Section 232
3/19 FRN on exemptions

April 2017 February 2018

President Trump ordered White House releases report
DOC to review the impacts of to public (3 Options)
steel imports on America’s
national security
 25%
So Here We Are...
Tariffs kicked in at 12:01 am on March 23, 2018.
Concrete reinforcing Long products - bars, Pipe and tube products - Flat products - sheets,
Bar - “Rebar” rails, rods, and beams either seamless or welded strips, and plates

Remember, Domestic Steel is Tariff Free

These new tariffs related to national security cover material produced by foreign mills only.

Fabricated structural steel is NOT included in these tariffs.

Any Exemptions From These Tariffs?
Imports from Canada & Mexico were initially exempt but are “subject to successful NAFTA renegotiations”

As of 3/23, exemptions for Australia, Argentina, European Union, South Korea, and Brazil are official until May
1, 2018. These countries listed above represent more than half of the steel being imported into the U.S.
 25% Tariff
≠
25% Cost Increase
Volume - Domestic Production
John Smith
The capacity of the market to supply the demand of the
marketplace Title
149 Million Tons
11 Million Tons

→ Total US steel making capacity (at 100% capacity utilization) 38 Million Tons
is 149 million tons (Imports)
→ Steel consumption in 2016 was 101 million tons

→ In 2017, U.S. imports of steel mill products amounted to 38

million tons
101 Million Tons
→ This results in a production surplus of 11 million tons. (Consumption)

Bottom line: The U.S. steel industry has 50 million tons of extra
capacity to service the design and construction industry.

Photo: James West

Volume - Domestic Fabrication
John Smith
The capacity of the market to supply the demand of the
marketplace Title
10 Million Tons

2.0 Million Tons

(Surplus)
→ U.S. structural steel fabrication capacity is 10 million tons
1.7 Million Tons
→ Domestic consumption of structural steel in the (Imports)
construction market was 6.3 million tons

→ Even if all 1.7 million tons of structural steel imports are

replaced by material that is produced and fabricated
domestically, there is adequate fabrication capacity to meet 6.3 Million Tons
all foreseeable domestic market demand (Consumption)
Velocity
John Smith
The speed at which available supply can reach the end user
Title
→ Domestic structural steel mills are on industry standard
rolling cycles where their product line is produced in a single
cycle. Mills do maintain a limited amount of ground stock.

→ Fabricators typically get ordering preference

→ Steel service centers currently stock a quantity of structural

steel equivalent to about 3 months of demand providing
next day delivery to structural steel fabricators across the
US

→ Larger projects may opt for a hybrid delivery schedule

where initial supply comes from a service center with the
remainder supplied directly from a mill

→ The single greatest challenge to the velocity of material

supply is not from foreign tariffs on steel, but from the lack
of truck drivers to transport materials.
Variety
John Smith
The number and variety of items within a product family that are
being used in the marketplace
Title

→ Our experiences in 2004 taught the construction industry a

significant lesson that was counter-intuitive

→ It was assumed that commodity products with only a few

items in their product line (such as rebar, post-tensioning
strands or metal stud sizes) would be easier to get than
products with many items such as structural steel sections

→ It turned out the exact opposite was true

→ A small number of items led to hoarding by general

contractors and suppliers

→ A large number of items for a product line such as structural

steel does not allow for hoarding and results in a disciplined
marketplace
Value Example
John Smith
Project cost breakdown focused on a hypothetical foreign steel
package Title
Total Project Cost
$100,000,000

Steel Package (12% of total project cost)

$12,000,000

Steel Material Only (30% of Steel Package)

$3,600,000

Worst-case Scenario (25% increase in

material cost)
$900,000 (0.9% of total project cost)
Value Continued
John Smith
We need to look at relative value, not absolutely value
Title

→ Need to remember that there is a significant

amount of steel in a concrete framed building
○ Rebar
○ Post-tensioning strand
○ Ductwork
○ Elevator framing
○ Piping

→ While this may not be structural steel

sections, it too will be impacted by the 25%
tariffs

→ We have looked at the steel quantities in

comparable steel framed and concrete
framed buildings
 Photo Credit: Magnusson Klemencic
Associates, Michael Dickter

John Smith
Title

©Henrik Kam Photography

Steel Quantities in Steel and
JohnBuildings
Concrete Framed Smith
Title
We need to look at relative value, not absolutely value
→ Typically the tonnage of steel in a concrete building is about
80% of that in a steel framed building

→ In a study done during the volatility of the early 2000s, it

was determined that for every $100 average increase in the
overall cost of all types of steel

○ The cost of a steel framed building would

increase 3.6%
○ The cost of a concrete framed building would
increase 3.2%

→ And that does not take into account any increase in the cost
of concrete which has been increasing annually between 3%
and 4%
Value Isn’t Just Dollars and
Cents John Smith
Title

→ Keep in mind that from an environmental impact

perspective the CO2 emissions (global warming potential) of
structural steel produced in China is 3 times that of
structural steel produced in the US

→ The bottom line: Yes, steel tariffs will increase the cost of
construction, but the increase will impact steel framed and
concrete framed structures similarly
Volatility
John Smith
The predictability of the price and availability of the product
Title

→ The volatility that was experienced

10 years ago was driven by the
supply of scrap – we don’t see the
same conditions today Stability

→ History shows that if price volatility is

present in the market it impacts all
construction materials not just the
material triggering the volatility as
supply, demand and margin levels
equalize

→ In general when tariffs are

introduced into a market there is an
initial adjustment of price levels but
a market driven settling
How will these tariffs impact
John
U.S. design and Smith
construction?
Title
1. Domestic steel mills, service centers and fabricators are alive
and well with more than enough capacity to meet all of our
construction and infrastructure needs.
2. Steel is readily available from our mills and from our service
centers/warehouses.
3. A 25% tariff on steel does not equate to a 25% increase in
the cost of the project or even the portion of the project
represented by the steel package.
4. Any increase in the price of steel impacts all construction,
not just structural steel construction.

Photo: Miró Rivera Architects

Controlling Risk and
John Smith
Gaining Control!
Title

→ Involve your fabricator early

→ Continue to design your projects while

leveraging the benefits of structural steel

→ Have a seat at the table to best understand

the steel supply chain constraints for YOUR
individual project

→ Ask for help and assistance when needed!

Photo: Jeremy Bitterman

We’re Here To Help!
John Smith
Title
We’re Here To Help!
John Smith
Title

aisc.org/solutions | solutions@aisc.org | 866.ASK.AISC

www.aisc.org | Twitter: @aisc | Instagram: @aisc
Facebook: facebook/aiscDOTorg
Questions?
Tabitha Stine | Brian Raff
Friday, March 23, 2018

If you have additional questions or would like to learn more, please email solutions@aisc.org.
 Photo: THP Limited, Inc. Photo: Jon Miller, Hedrich Blessing

Assessment of Learning Objectives

Based off today’s webinar, do we anticipate that the tariffs will impact the availability of domestically
fabricated structural steel on current and upcoming projects? Photo: Jeremy Bitterman

Simply type your response on the chat screen in your live webinar view at this time.
This concludes The American Institute of Architects
Continuing Education Systems Course

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