Many of our clients are looking to reshore in some way. What that looks like depends on the company and their needs. MTG helps these companies understand their manufacturing situation and develop a plan to meet their goals. One of our current clients we work with asked the question “Is it possible to manufacture products competitively in North America without Chinese Steel”. The answer is absolutely; however, it requires more work and investment to be successful.
We need to understand the costs and what part they play in the manufacture of the finished goods.
Chinese vs US Steel, prices and costs
On a raw material basis, Chinese steel is typically far cheaper than U.S. steel. Hot-rolled coil or structural plate in China might land in the $400–550 per ton range, while U.S. mill pricing can sit closer to $850–1,100 per ton.
That difference matters but not as much as you thought once other factors (including tariffs) are considered.
Step 1: The Base Price Gap
At the mill level, Chinese hot-rolled coil or structural plate might price around:
- $450–$550 per ton (FOB China)
Meanwhile, comparable U.S. domestic steel might run:
- $850–$950 per ton (mill price)
On paper, that’s a $300–$500 per ton difference.
That gap receives attention, but the raw numbers do not cover all the costs.
Step 2: Add Tariffs and Freight
Chinese steel entering the U.S. is subject to:
- 25% Section 232 tariff
- Ocean freight
- Port handling
- Inland freight
- Customs processing fees
Let’s run a realistic example.
Chinese Steel (Imported into U.S.)
- FOB China: $500
- Ocean freight + inland transport: ~$150
- Section 232 tariff (25% of $500): $125
Total land costs $775 per ton
U.S. Steel (Domestic Purchase)
- Mill price: $900
- Domestic freight: ~$50
Delivered cost ≈ $950 per ton
The Real Steel Delta
After tariffs and freight:
- Imported Chinese steel ≈ $775/ton
- U.S. steel delivered ≈ $950/ton
Actual difference ≈ $175 per ton
That is a considerable drop.
That’s the number manufacturers should use in serious cost modeling.
What That Means for a Finished Product
Now let’s apply this to a fabricated product made entirely in the U.S.
Assume:
- The product uses 1.5 tons of steel
- Fabrication, labor, overhead, and finishing total $5,000
Using U.S. Steel
- Steel: 1.5 × $950 = $1,425
- Fabrication: $5,000
Total factory cost = $6,425
Using Chinese Steel
- Steel: 1.5 × $775 = $1,163
- Fabrication: $5,000
Total factory cost = $6,163
Net Savings: ~$262 per unit
That’s roughly a 4% reduction in total manufacturing cost in this example.
Important? Yes.
Transformational? Usually not.
And that assumes:
- No anti-dumping (AD) or countervailing duties (CVD)
- No supply chain disruption
- No extended lead times
- No inventory carrying cost impact
When the Steel Choice Matters More
The decision becomes more sensitive when:
- Steel represents more than 50–60% of total product cost
- Each unit uses 3–5+ tons of steel
- Margins are tight
- Production volumes are high
If steel weight increases, the savings increase at the same rate.
But for many engineered products — industrial equipment, lifts, modular structures, heavy assemblies — steel often represents 30–45% of total cost. In those cases, labor productivity and operational efficiency can outweigh the steel delta.
Hidden Variables Often Ignored
When evaluating imported steel, manufacturers should also consider:
- Longer procurement lead times
- Larger minimum order quantities
- Working capital tied up in ocean transit
- FX exposure
- Tariff risk changes
- Potential AD/CVD rulings
- Domestic content requirements (Buy America, federal projects)
These factors don’t show up directly in per-ton pricing — but they affect total cost and risk profile.
Strategic Perspective
We tell our clients that they should not ask:
“Is Chinese steel cheaper?”
But instead:
“How much does steel actually move the needle in my total cost structure?”
After tariffs and logistics, the real-world difference is often around $150–$200 per ton.
For many U.S. manufacturers, that translates to a 2–6% total product cost difference.
Sometimes that margin matters.
Sometimes operational efficiency, automation, speed, and supply stability matter more.
How to Manufacture More Efficiently
Assuming your margins are not razor thin, automation and strong lean processes can shrink the difference further.
Automate as much as possible to reduce the costs. We told our client that it would not be possible to close the gap without implementing the following processes:
- CNC beam lines
- Robotic welding
- Automated paint systems
- Lean cell assembly
There is a cost, in both time and resources, to put these systems and install the equipment. Each company needs to review its goals, priorities, and risk before making investing in these systems. There is no one size fits all solution.
Are the Costs Worth the Solution?
For our current client, this is a good solution and worth the cost. They were able to control their production and drive improvements. It had the added benefit of new US government contracts. While that work for your company? Come talk to us and let’s find out.
What can MTG do to help you improve your operations?
