Voest, Amag & Co.

Trump’s tariffs threaten domestic industry

Voestalpine in Linz

(Bild: Wenzel Markus)

The planned US tariff of 25 percent on steel and aluminum products would also hit many domestic companies hard. Voestalpine, Amag, BMW Steyr, Magna, Glock and others do good business in the United States, and our exports there have recently grown strongly.

Important details such as the time of effectiveness are still missing, but it seems certain that US President Donald Trump will make good on his announcements and soon introduce high tariffs on imported steel and aluminum products. "Tariff is my favorite word in the dictionary," he announced with a grin. According to him, the levy is likely to amount to a whopping 25 percent. 

The reason for this is that the USA buys around a quarter of its steel requirements from Canada, Brazil, Mexico and so on. For aluminum, the figure is almost 50 percent, mostly from Canada. Trump wants to compensate for this trade deficit by making foreign goods significantly more expensive and giving domestic production a competitive advantage.

For Austria's industry, this is an additional blow in an already weak economy. In steel, for example, we delivered 243,000 tons last year (plus 43,000 tons of aluminum). The export value amounted to around 653 million euros. In addition, processed metal products have recently been our top exports to the USA. Last year, Austria's exports to North America increased by 14 percent to 14 billion euros. Machinery, equipment, vehicles, etc. were particularly successful. BMW Steyr, Magna, pistol giant Glock, Voestalpine and Amag, for example, did big business.

Tariffs already in the first term of office
These two Upper Austrian companies are therefore currently examining the possible consequences. In any case, Voest's share price fell immediately. However, they have experience with this situation, as Trump imposed special tariffs of 25 percent on steel and 10 percent on aluminum during his first term in 2018. According to Amag, the company was able to pass on most of the additional costs to its customers, such as aircraft manufacturer Boeing, and got off lightly.

At the time, Voest expected to lose up to three percent of its global turnover. It didn't turn out to be that bad, and the Linz-based company already has a massive presence in the USA with 49 locations for railroad switches, for example, which reduces the threat. There was also the possibility of obtaining exemptions for special products at the time, and ultimately an agreement was reached with the EU on preferential tariff quotas.

Domestic companies are hoping for such pragmatic solutions this time too. The EU is also planning its own punitive tariffs as a means of exerting pressure. In 2018, Harley motorcycles, whiskey and jeans were hit. In any case, our economic growth will shrink. According to Wifo boss Felbermayr, our exports would "suffer severely".