Texas manufacturers expect hit from steel tariffs, Dallas Fed survey shows

Workers manufacture medical devices at the Seisa Medical plant on Wednesday, Jan. 31, 2018, in Ciudad Juarez, Mexico. ( Brett Coomer / Houston Chronicle ) Workers manufacture medical devices at the Seisa Medical plant on Wednesday, Jan. 31, 2018, in Ciudad Juarez, Mexico. ( Brett Coomer / Houston Chronicle ) Photo: Brett Coomer/Houston Chronicle Photo: Brett Coomer/Houston Chronicle Image 1 of / 3 Caption Close Texas manufacturers expect hit from steel tariffs, Dallas Fed survey shows 1 / 3 Back to Gallery

Texas manufacturers said the Trump Administration's steel tariffs will raise their costs, prompting higher prices for customers of fabricated metal products and creating uncertainty for the business this year, according to a Dallas Fed survey.

"Our business had a sudden, dramatic change in outlook due to the new steel tariffs," one primary metal manufacturer in Texas told the Federal Reserve Bank of Dallas. "We expect a wild, unpredictable ride as there are also large, negative and unintended consequences which will hurt us."

Manufacturing activity continued to rise in Texas factories this month, but at a reduced speed, with the Dallas Fed's production index, which measures factory activity, declined from 15 points to 12.7 points. Growth of new orders, the Dallas Fed said, dropped from 8.3 points to 3.8 points.

"Outlook remains quite positive, although nearly 20 percent of firms said uncertainty regarding their outlook increased last month – the highest share since we added this new question in January," said Emily Kerr, a business economist at the Dallas Fed.

Manufacturers pointed to the 25-percent tariffs on steel and 10 percent tariffs on aluminum, which went into effect last week.

"The national rhetoric regarding steel tariffs immediately raised the price of steel significantly," one fabricated metal product manufacturer said. "We had a large amount of steel under contract, yet to be purchased, which will ultimately increase costs and reduce profits considerably."