US Tariffs on Aluminum and Steel, An Opportunity for Colombian Exports

Since Donald Trump was elected President of the United States in 2016, the economic landscape on steel and aluminum imports changed when his administration announced the creation of tariffs. The tariff of 25% on steel imports and 10% on aluminum imports took effect this year..  These new tariffs have created opportunities for businesses in Colombia who export manufactured products that use steel and aluminum as raw material and compete in the American market.

Window frame manufacturers who produce and assemble in Colombian soil and export the finished goods stand to benefit from the new tariffs because they are not affected by the heavy tariffs imposed by the Trump administration and are not forced to raise their prices when sold in the American market. On the other hand, window frame manufacturers who produce and assemble inside the United States are heavily affected by the new tariffs because the price of their raw material, that is mainly imported from other countries, has increased raised significantly. This has forced US window frame manufacturers to, in turn, raise the price of their products up to 10%, therefore losing competitiveness in the market. Therefore Colombian window frame manufacturers selling their products in the United States now have a competitive advantage in comparison with their American counterparts.

One company that has taken advantage of its newly found competitive advantage  is Barranquilla-based window manufacturer Tecnoglass. Tecnoglass is present in several regions of the United States and its market share has grown as a result of the tariffs. Due to the accelerated growth Tecnoglass  has began investing to expand their  production capacity to meet the growing demand.

Additionally, concerns over Colombia’s steel sector being negatively affected by the new tariffs has proven to be unfounded because demand for steel has not decreased since the announcement of the new tariffs even in spite of higher prices. Secondly, the Colombian steel sector is not greatly dependent on exports to the United States and is mainly an importer of steel. Therefore the new US tariffs on steel have not impacted Colombia’s imports of steel.

The new economic landscape is promising for many other sectors of the Colombian economy using aluminum and steel in their products and generates enormous opportunities for growth in the country’s manufacturing sector. The competitive advantage exporting products containing aluminum or steel to the United States combined with Colombia’s political and economic stability makes Colombia an attractive destination for local or foreign investment.

References:

Bloomberg. (2018, August 13). Aranceles de Trump benefician a fabricantes de ventanas colombianos. Portafolio. Retrieved September 22, 2018, from http://www.portafolio.co/negocios/aranceles-de-trump-benefician-a-fabricantes-de-ventanas-colombianos-520016

Revista Dinero. (2018, June 25). ¿Por qué los nuevos aranceles de Trump no afectan tanto a Colombia? Dinero. Retrieved September 22, 2018, from https://www.dinero.com/empresas/articulo/que-efecto-tienen-los-aranceles-de-trump-en-colombia/259621

Swanson, A. (2018, May 31). White House to Impose Metal Tariffs on E.U., Canada and Mexico. The New York Times. Retrieved September 22, 2018, from https://www.nytimes.com/2018/05/31/us/politics/trump-aluminum-steel-tariffs.html