Huntington Ingalls Says Steel Tariffs Won't Raise Prices for Now

Huntington Ingalls Industries, the largest shipbuilder for the U.S. government, said new tariffs on steel and aluminum should not impact the price of its own shipbuilding in the near-term, but does not know if tariffs will raise prices for its suppliers.

 

Huntington's Newport News Shipbuilding yard in Virginia has a multi-year financial agreement that guarantees steady pricing for its steel, known as a hedge, Jennifer Boykin, president of Newport News Shipbuilding in Newport News, Virginia, told reporters on Tuesday at the Sea Air Space Exposition in National Harbor, Maryland.

 

The Newport News shipyard builds the Navy's aircraft carriers and the hedge expires in October 2019.

 

While the hedging contract ensures steel costs for Huntington Ingalls will not rise dramatically in price during that time, the company does not know if its suppliers face commodity price risks or have similar hedges. Boykin said her company has asked its supplier base how potential tariffs will impact their pricing.

 

Huntington Ingalls is in the running to build one, possibly two aircraft carriers in the coming years, each of which could cost more than $13 billion.

 

President Donald Trump has ordered tariffs of 25 percent on steel imports and 10 percent on aluminum, but has offered exemptions to several countries. Although the U.S. defense industry primarily uses U.S.-sourced steel, higher prices globally would affect even domestically mined metals.

 

Steel and aluminum users that depend on imported products not available from U.S. producers may have to wait up to 90 days for an exclusion from the tariffs.


(Reporting by Mike Stone; Editing by Phil Berlowitz)