Will Trump’s Tariff on Steel Disrupt the Knife Industry?

Yesterday, during a meeting with CEOs of US steel and aluminum manufacturers, Donald Trump caught the world’s attention after he threatened to slap a 25% tariff on steel imports and a 10% tariff on aluminum. How soon would he move on the measures? “Next week,” Trump said. “What’s been allowed to go on for decades is disgraceful. It’s disgraceful,” he reiterated.

Today, Trump followed up the threat with a tweet that hints he might go even further.

When a country Taxes our products coming in at, say, 50%, and we Tax the same product coming into our country at ZERO, not fair or smart. We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us. $800 Billion Trade Deficit-have no choice!

— Donald J. Trump (@realDonaldTrump) 2 March 2018

With the European Union already saying they would retaliate with protectionist measures of their own, the action could spark an international trade war and have implications that go far beyond the knife industry. But, we wondered how a possible tariff on steel on the immediate horizon might affect knife companies and the price of knives for consumers.

Knife makers tell us that blade steel can represent upwards of 25% of the materials costs that go into making a knife. But, Elliot Williamson, Co-Founder of Ferrum Forge explains that in the short-term, an increase in the cost of steel is more likely to have an impact on bigger US knife manufacturers like Spyderco, Benchmade, and KAI-USA than custom makers and small batch shops. “As a percentage of the total cost of a knife, the cost of the steel itself has less of an impact on the overall price of the knife,” Williamson explains. “Most of the cost of a custom knife is coming from the time input of the maker.”

We also reached out to Scott Devanna, Vice President of Technology for steel distributor SB Specialty Metals for his reaction to the news. “It’s hard to predict to what degree this would impact steel prices. There’s a lot we don’t know,” he tells us. “You have to realize that the knife industry’s demand for steel is minuscule compared to other industries. It’s a drop in the bucket.”

A veteran of the steel industry, Devanna says that as the costs of imported steels like Bohler M390 and Sandvik go up it could also drive up the prices of domestic steels as major buyers in power generation, aerospace, and oil patch transition to more American made steel. “It’s possible American steel makers would see this as an opportunity to raise prices. It’s a balancing act,” he says.

Devanna tells us that if there was a run on domestic steel it could stretch out lead times, but he’s not concerned about the availability of steel for knife manufacturers. “The team of Crucible Industries and Niagara Specialty Metals should be able to handle any kind of shift in demand.”

Knife featured in image: Zero Tolerance 0393