How Tariffs on Steel and Aluminum Could Impact Illinois’ Small Businesses

Businesses and manufacturing are starting to feel the impact of steel and aluminum tariffs that took effect Wednesday. The Trump administration is putting a 50% tax on these metals when they’re imported from other countries.

Backers say it’s an effort to protect national security and promote more domestic manufacturing, but critics say it could drive up costs.

Foreign-made steel is used in household products like stainless steel refrigerators, microwaves and soup cans. Car manufacturers and the beverage industry also rely on aluminum and steel that they can get cheaper from other countries.

Ray Stout, executive director of the Illinois Craft Brewers Guild, said the tariffs will be an extra pressure on small beer companies that already deal with small margins from the costs of production. He said many local businesses won’t be able to afford to absorb the costs and will have to shift the price burden onto consumers.

“These craft brewers are paying 13 cents and 25 cents per can,” Stout said. “Even just looking at the independent brewers, if you tack on a 2 cent price increase, that’s well over $1 million that’s either going to have to be paid for by the small manufacturer or passed on to the consumers.”

Robert Gulotty, a political science professor at the University of Chicago, said small companies don’t have the resources to bear the brunt of these tariffs the same way large corporations can, and will therefore be hurt the most.

“You’re not necessarily going to be able to survive by trying to raise your prices on consumers,” Gulotty said. “So you just end up shutting down anyway. Some people can pass on the prices right to consumers, but others, they’re going to be stuck. That means in many cases they’ll never come back. One of the challenges with the tariffs we’ve seen in the past, we look at the communities that were affected. They don’t recover. It just accelerates the sort of deindustrialization of America.”

Julie Workman, a real estate lawyer and partner at Saul Ewing LLP, said the back-and-forth nature of President Donald Trump’s trade policies is causing uncertainty in the home building market. While she said her clients and partners haven’t seen increased construction costs yet, the unknown impacts are slowing down many projects. The tariffs could mean fewer housing options and higher prices for owners and renters.

“When a builder is working on its numbers and running pro formas for these projects, all they have in front of them is what numbers they’ve got today,” Workman said. “You can try to extrapolate out what things are going to look like in six or nine or 18 months, but it’s really hard to do. That uncertainty is going to make people’s jobs a lot harder.”