Trump’s tariffs will hurt the 6.5 million U.S. workers at steel-consuming manufacturers

 In U.S.

President Donald Trump’s plan to impose tariffs on aluminum and steel imports is a near-term credit positive for steel producers, but it will hurt steel-consuming manufacturers and their workers, who greatly outnumber steelworkers, Moody’s Investors Service said Friday.

There are about 140,000 steelworkers in the U.S., according to the American Iron & Steel Institute, and about 6.5 million workers in steel-consuming manufacturers, Moody’s analysts wrote in reports published Friday.

“Workers in these consuming sectors will likely be hurt by higher steel prices,” they said. “Domestic manufacturers could also eventually switch to importing whole components of finished products that are made from steel to reduce their product costs, which would lead to reduced domestic steel demand in the long term.”

Trump said Thursday he would impose a 25% tariff on steel imports and a 10% tariff on aluminum. The news sent stocks tumbling, as investors braced for the possibility of a trade war. The tariffs are likely to boost prices of both metals in the U.S., weighing on all those manufacturers that need them as raw materials.

Read now: Here’s why the Dow is taking the Trump tariffs so hard

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Raw-material prices have already been rising in response to growing demand. Diversified industrial companies are currently enjoying rising sales and EBITDA (earnings before interest, taxes, depreciation and amortization) growth, thanks to the strong global economy, which has helped companies exposed to commodities dig their way out of a prolonged trough. That will help offset any impact from rising input costs, said Moody’s.

However, “protectionist trade policies, including tariffs on raw-material imports, could exacerbate these inflationary pressures, running the risk of tighter margins and possible supply-chain disruptions in the manufacturing sector,” said the agency.

See: What history teaches us about who wins in trade wars

Also: Trump goes rogue, finally becoming the president he said he’d be

The industries most at risk are equipment makers and component suppliers in the aerospace and transportation and automotive sectors. These include aluminum parts makers that are suppliers to the aerospace and car sectors, as well as steel parts makers selling to sectors such as railroads, trucking, energy and construction.

Companies that supply parts to those sectors include Visteon Corp.

VC, -0.22%

, Delphi Technologies PLC

DLPH, +0.32%

, Cummins Inc.

CMI, +1.26%

, Honeywell Inc.

HON, +0.25%

, United Technologies Co.

UTX, +1.36%

, Johnson Controls Inc.

JCI, +1.79%

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