Why domestic metal prices are rising too

Summary

Marketplace Morning Report: "Why Domestic Metal Prices Are Rising Too"
Release Date: March 26, 2025
Host: David Brancaccio

In this episode of the Marketplace Morning Report, host David Brancaccio delves into the multifaceted issue of rising domestic metal prices in the United States. The episode explores the interplay between government policies, international trade tensions, and their impact on local businesses. Additionally, it touches upon a significant geopolitical development involving Russia and Ukraine, and concludes with a brief look into the evolving landscape of cryptocurrency in the retail sector. The report is structured into several key segments, each shedding light on different aspects of the economic landscape.

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1. Supreme Court to Hear Case on FCC's Authority Over the Universal Service Fund

The episode opens with Nancy Marshall Genzer discussing an impending Supreme Court case that scrutinizes the extent of the Federal Communications Commission's (FCC) authority in administering the Universal Service Fund (USF).

• Universal Service Fund and its Purpose: Established in the 1990s, the USF aims to subsidize phone and Internet services in rural and low-income areas, bridging the digital divide.

• Controversy Over FCC's Power: The conservative group Consumers Research contends that Congress overstepped by granting the FCC broad authority to manage the fund. They argue that such power should reside with Congress, which should directly handle the funding rather than delegating it to federal agencies.

• Supreme Court's Role: The case represents a broader judicial examination of federal agency powers. Nancy Marshall Genzer notes, "The court will hear oral arguments today. It should issue a decision by the end of June" (00:52).

This segment sets the stage for understanding the regulatory environment affecting infrastructure development and federal oversight.

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2. Russia-Ukraine Ceasefire Agreement in the Black Sea

David Brancaccio transitions to international news, highlighting a recent agreement brokered by the U.S. aimed at establishing a ceasefire in the Black Sea amidst ongoing tensions between Russia and Ukraine.

• Details of the Agreement: The deal proposes a temporary halt to hostilities, specifically pausing airstrikes on energy targets and allowing cargo ships to navigate the Black Sea safely.

• Mutual Distrust: Both Russia and Ukraine express skepticism about the longevity and sincerity of the agreement. James Landale from the BBC reports, "It was not even clear when the maritime ceasefire might start" (02:05).

• Russia's Conditions: Russia demands the lifting of sanctions on agricultural exports as a prerequisite for honoring the ceasefire. Ukraine opposes this, complicating the implementation of the agreement.

• President Zelenskyy's Stance: Zelenskyy accuses Russia of deceit, asserting that Russia is attempting to manipulate the deal. He stated, "Russia had lied to the US about this and was already trying to manipulate and distort the deal" (02:05).

• Economic Implications: Russia is also seeking the reconnection of its major banks to the global payment system, crucial for trade in agricultural products like food and fertilizer. The episode underscores the fragile negotiations and their potential impact on international trade and security.

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3. Rising Domestic Metal Prices Amid Tariffs on Steel, Aluminum, and Copper

A significant portion of the episode focuses on the surge in domestic metal prices, analyzing the factors driving this trend and its repercussions on businesses.

• Trump Administration's Tariff Plans: Bloomberg News reports that the Trump administration is contemplating increasing tariffs not only on steel and aluminum but also introducing new tariffs on copper. This move has led to a spike in copper prices, reaching record highs.

• Impact on Manufacturers: Higher metal prices affect companies reliant on both domestic and foreign suppliers. For instance, Mike Samples of Monster Rings and Cages in Lawrenceburg, Kentucky, observes, "You might expect tariffs on imported metal would just raise the price of imported metal, but the price of this American made steel is going up too, from about 60 cents a pound to 75 cents" (04:49).

• Cato Institute's Perspective: Clark Packard, a researcher at the Cato Institute, explains, "US Metal makers are raising prices more or less because they can" (05:05). He argues that by increasing tariffs on foreign metals, domestic producers feel justified in elevating their own prices, reducing competitive pressure.

• Skepticism About Long-Term Benefits: Packard is doubtful about the long-term advantages of this strategy, stating, "Historically, the economics don't back up that idea, especially when threats of new tariffs seem to happen every day" (05:22). The uncertainty created by fluctuating tariff policies deters investment and complicates planning for businesses.

• Broader Economic Concerns: The episode also connects rising metal prices to declining consumer sentiment, with expectations about the future economy reaching a 12-year low. Concerns over inflation and uncertain government policies, including tariffs, contribute to this negative outlook (04:31).

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4. Business Perspectives: Challenges Faced by Domestic Manufacturers

Through interviews with local business owners, the episode illustrates the tangible effects of rising metal prices and trade policies on American businesses.

• Monster Rings and Cages: Mike Samples discusses how tariffs have led to increased costs for steel, essential for constructing arenas for sports and entertainment. He highlights the broader struggle of maintaining competitiveness amidst rising material costs.

• Deborah Dudley's Grill Accessories Business: Deborah Dudley shares her surprise and frustration upon learning that domestic aluminum prices are increasing, despite being sourced locally. She remarks, "I don't know why it would increase something that's already made here in the USA" (06:02). Dudley expresses hope that prices will stabilize, but also contemplates whether future tariffs might mitigate costs by discouraging foreign competition.

• Impact of Chinese Competition: Both business owners grapple with the prevalence of inexpensive Chinese knockoffs, which complicates their efforts to sustain profitability and maintain market share.

• Economic Hardships: The unpredictable nature of tariff implementations, described by Packard as "stop, start, stop start," creates an unstable business environment, making it difficult for companies to plan and invest confidently (05:35).

These personal accounts underscore the broader economic ripple effects of trade policies, affecting everything from production costs to strategic business decisions.

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5. Gamestop Embraces Bitcoin: A Shift Towards Cryptocurrency

In a brief segment, Brancaccio highlights a noteworthy development in the retail sector involving Gamestop.

• Gamestop's Strategic Move: The video game retailer has approved a plan to invest a portion of its cash holdings into Bitcoin. This decision is seen as an attempt to enhance returns in an environment where traditional cash investments yield minimal interest.

• Market Reaction: Following the announcement, Gamestop's shares surged by 11%. Bitcoin itself has seen a 26% increase over the past year, although it remains down 5.6% for the current year.

• Industry Implications: This move signifies a growing trend of traditional retailers exploring cryptocurrency as part of their financial strategy, reflecting broader acceptance and integration of digital assets in mainstream business practices.

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Conclusion

The Marketplace Morning Report episode titled "Why Domestic Metal Prices Are Rising Too" offers a comprehensive analysis of the interplay between government policies, international trade tensions, and their tangible impacts on American businesses. From the Supreme Court's examination of federal agency powers to the volatile dynamics of the Russia-Ukraine conflict, the episode paints a detailed picture of the current economic landscape. The rising domestic metal prices, exacerbated by tariffs and supply chain complexities, present significant challenges for manufacturers and contribute to broader economic uncertainties. Additionally, the segment on Gamestop's foray into Bitcoin highlights the evolving strategies businesses are adopting in response to changing financial environments. Overall, the episode provides listeners with valuable insights into the forces shaping the economy and the business world.

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Notable Quotes:

• Nancy Marshall Genzer: "The court will hear oral arguments today. It should issue a decision by the end of June." (00:52)

• James Landale (BBC): "It was not even clear when the maritime ceasefire might start." (02:05)

• Mike Samples: "You might expect tariffs on imported metal would just raise the price of imported metal, but the price of this American made steel is going up too, from about 60 cents a pound to 75 cents." (04:49)

• Clark Packard: "US Metal makers are raising prices more or less because they can." (05:05)
  "Historically, the economics don't back up that idea, especially when threats of new tariffs seem to happen every day." (05:22)

• Deborah Dudley: "I don't know why it would increase something that's already made here in the USA." (06:02)
  "I think it's just too soon to really know how it's all gonna, how things are gonna be okay today." (06:20)

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Note: Timestamps correspond to the transcript segments referenced in the summary.

Transcript

[David Brancaccio]

Hi, it's David Brancaccio. Marketplace's March fundraiser is ending on Friday at midnight and we need your help. We can't afford to fall short of this goal. Every dollar you give comes back to you in the form of trustworthy, grounded journalism that helps you understand the economy. We're in this together. Whether it's your first time donating or you're a longtime Marketplace investor, please help us [e-mail] donate and thank you. It's sort of like sriracha. Need some zest? Add crypto. I'm David Brancaccio in Los Angeles. First, there's an ongoing program to expand fast Internet to rural and otherwise underserved communities. But do those rules go too far? The US Supreme Court is set to hear that case today, which involves the digital divide and the power of federal agencies. Marketplace's Nancy Marshall Genzer reports.

[Nancy Marshall Genzer]

You ever look through all those extra fees on your cell phone bill? One of them is called the Universal Service Fund. It was set up by the Federal Communications commission in the 1990s. The fund helped subsidize phone and Internet service in rural and low income areas. The conservative group Consumers Research argues that Congress gave the FCC too much power to run the fund. A nonprofit collects and then distributes money for the fund. Consumers Research says that steps on Congress power to tax and spend and lawmaker should budget money for the fund themselves. The FCC says Congress has traditionally given federal agencies wide latitude to administer programs like this. This is the latest Supreme Court case to look at the broader question of how much authority federal agencies should have. The court will hear oral arguments today. It should issue a decision by the end of June. I'm Nancy Marshall Genser for Marketplace.

[David Brancaccio]

Russia and Ukraine, brokered by the US Reached a deal yesterday for a kind of cease fire in the Black Sea to allow cargo ships through. Russ will honor the agreement only if certain sanctions are lifted, something Ukraine opposes. James Landale with our partners at the BBC reports from Kyiv.

[James Landale]

Russia and Ukraine may have agreed to end their fighting on the Black Sea and pause airstrikes on energy targets. But both sides expressed little trust in even this limited deal holding. It was not even clear when the maritime ceasefire might start. Ukraine said it would begin immediately. But Russia demanded a whole swathe of sanctions on agricultural exports were lifted first, something that could take time and may not be entirely in America's gift. In his nightly address, President Zelenskyy said Russia had lied to the US about this and was already trying to manipulate and distort the deal.

[David Brancaccio]

Among Russia's Other conditions for that limited ceasefire. It wants its big banks reconnected to a major global payment system that's used for, among other things, trade in agricultural products like food and fertilizer. We check in with businesses in and around the Port of Baltimore on this one year anniversary of the fatal collapse of the Key Bridge after it was struck by a cargo ship. The Marketplace morning podcast has that coverage now. The Dow is up 174 points, 4 10%. The S&P 500 is down by just a sliver. The NASDAQ is down 4/10. Actually it's down 7 10%. Now this as market players digest the news we reported yesterday showing consumer sentiment plunging this month with the reading on expectations about the road ahead hitting the lowest level in 12 years, given worries about inflation and uncertainty over government policies including tariffs. Bloomberg News is reporting this morning that the Trump administration is considering raising the tariff on not just steel and aluminum, but another metal, copper. The price of copper, already high, jumped to a record on that news. For companies that buy metal for their products, it's both foreign and domestic suppliers with the higher prices. Kentucky Public Radio's Justin Hicks reports.

[Mike Samples]

In Lawrenceburg, Kentucky, a small company called Monster Rings and Cages makes arenas for boxing, wrestling and mixed martial arts fights. It's made fighting rings for movies and even Madison Square Garden. And each of these arenas require a decent bit of steel.

[Deborah Dudley]

That's the sound of industry.

[Mike Samples]

That's owner Mike Samples giving a tour of the metal shop. Samples is a proud Made in the USA kind of guy. He gets as much steel from US Suppliers as he can.

[Deborah Dudley]

Boxing and MMA industry too. You have a lot of ex military people and they certainly are happy to see Made in the usa.

[Mike Samples]

Now you might expect tariffs on imported metal would just raise the price of imported metal, but Sample says the price of this American made steel is going up too, from about 60 cents a pound to 75 cents.

[Clark Packard]

Yeah, it ultimately comes down to competition, right?

[Mike Samples]

That's Clark Packard, a researcher at the Cato Institute. He says US Metal makers are raising prices more or less because they can.

[Clark Packard]

By raising prices of foreign steel and aluminum through tariffs, domestic producers are given sort of a green light to raise their own prices.

[Mike Samples]

And Packard has heard the argument that this will be a brief moment of pain in order to usher in a new golden era of manufacturing. But he's skeptical.

[Clark Packard]

Historically, the economics don't back up that.

[Mike Samples]

Idea, especially when threats of new tariffs seem to happen every day.

[Clark Packard]

Now stop, start, stop start. It makes it really hard to invest when it's it's so uncertain.

[Mike Samples]

And it turns out those price increases are happening in US Aluminum, too. Deborah Dudley owns a family business that makes grill accessories, also proudly made in the usa. She got a surprise when her supplier said her domestic aluminum prices were going up.

[Deborah Dudley]

You know, I don't know why it would increase something that's already made here in the usa.

[Mike Samples]

She's hoping domestic metal prices will cool down in time for her next order. And if not, maybe tariffs will help balance things out by scaring off foreign competition. She's constantly battling cheap Chinese knockoffs.

[Deborah Dudley]

I think it's just too soon to really know how it's all gonna, how things are gonna be okay today.

[Mike Samples]

While business owners like Dudley ride the trade war rollercoaster, President Trump says more tariffs are coming for steel, aluminum and vehicles. In Louisville, I'm Justin Hicks for Marketplace.

[David Brancaccio]

And a few years ago, the condiment that could spice up a stock was adding the word blockchain. A much ballyhooed verifies online accounting ledgers now just sprinkle on the word crypto. Shares of the video game retailer gamestop are up 11% now after the company approved a plan to buy Bitcoin for some of what would have been its cash holdings. The strategy, besides the vibe of a brick and mortar retailer embracing something crypto spiffy, is an assumption that Gamestop was earning a few percent interest on its cash, but maybe now can get higher returns betting its cash on bitcoin, which is up 26% over the last 12 months. 12 months, but down 5.6% this year so far. Our chipper early rising engineers are Jay Sebold, Brian Allison and John Brewington. In Los Angeles, I'm David Brancaccio. It's the Marketplace Morning report from APM American Public Media.

[Janelie Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Janelie Espinal, and each week I ask experts important money questions like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcasts.