In many industries the hardest job of senior management is to raise prices. People know many things about every industry, where the fixed costs are? what variable costs are possible? but sometimes government policies make it easier.

In an article by Peter Eavis of the News York Times News Service, American steelmakers are raising prices, forcing new costs onto domestic manufacturers.

Two big US producers Cleveland-Cliffs and Steel Dynamics reported they have charged more for their products in the 2nd quarter than they did in the 1st quarter.

About 1/5 of the steel sold in the US is imported. Tariffs went from 25% to 50%, which made imported steel more expensive. And as imports have declined, US producers have more power to opportunistically increase their prices, buyers say.

In the 2nd quarter, the average price of Steel Dynamics’ steel was $1,134 a ton, up from $998. Cleveland-Cliffs price went from $980 to $1,015 a ton or an increase of 16%.

Thomas McCartin, a senior economist with the pricing and purchasing service at S&P Global Market Intelligence, stated these are profit-maximizing firms, the domestic mills are going to try to get as much as they can.

According to the American Iron and Steel Institute, the top exporters of steel to the US are Canada, Brazil, South Korea and Mexico.

American-made steel is the most expensive in the world, and some analysts say domestic producers have gained a tight grip on US trade policy that allows them to charge more.

Linking to dividend paying stocks, tariffs increase prices. It tends to be a lagging indicator, but over time tariffs increase prices and companies that seemingly are immune from tariffs will use them to increase prices. Increasing prices over things being relative equal means greater revenues, the equation is simple, the execution is the most watched element by investors. Does the company have the ability to raise prices to increase revenues or will alternatives be found?

There are more questions than answers, till the next time – to raising questions.