Steelmakers press luck on pricing
The U.S. government introduced new levies in 2017 to regulate the imports of imports. The strategy was aimed at benefiting the U.S. steelmakers at the expense of distressing their competitors in the steel industry (Tita, 2017). New tariffs were levied on the foreign steelmakers while the domestic companies, a strategy that gave the domestic companies freedom to raise the pricing rates. In one way or the other, the new tariffs confirmed the existence of unfair competition between the local and the foreign steelmakers in the market. The impacts of the strategy were felt on the entire market. Although the duties levied on the steel imports translated into benefits for the domestic steelmakers, the approach threatened to drive away business (Tita, 2017). Although it results in huge profits, the strategic challenges the buyers who cannot afford the increased prices. The steel users have opted to go for cheaper alternatives for steel supply. The article provides significant analysis of both the positive and negative impacts of the tariffs in the steel market.
Tariffs on steel imports only benefit the domestic steelmakers without considering the buyers. Indeed, the steel buyers pay for these tariffs by paying high costs. Over the last months, the U.S. steelmakers have raised prices to more than half times the actual rates. The quick increase in prices sent off some customers and threatened to diminish the performance of the steel market in the United States. Even if the reasons for price increase could be transparent, the steel companies had to consider some key factors. First, the action of price increase was too fast (Tita, 2017). Secondly, too many increments were engaged. Lastly and importantly, the steelmakers raised the prices without seeking customer approval. A measure of trial and error is involved in the pricing of steel like it is in most of the strategies in a competitive market. Price increases should be made in consideration of customers as critical players in the market.
References
Tita, B. (2017). “Steelmakers Press Luck on Pricing,” Wall Street Journal, 11th Ed. April 20, 2017.