President Bush lifted the Steel tariffs in 2003, and most economists believed that U.S. steel prices would decline, and thus, bring down the price of cars. However, since the 2003 tariff lift, steel prices have actually increased:
"Soon after the tariffs were lifted, steel prices in the U.S. began to rise. This continued through the first quarter of 2004. As of early April, 2004, steel warehousers see no sign of significant in-bound steel from foreign shores that could drive the price of steel down to the level it had reached before Bush withdrew the tariffs." (Source, Wikipedia)
To make matters worse, only part of the tariffs on steel were removed. U.S. automakers claim they are still being hurt by steel price tariffs. A USA Today article suggested that the recent rise in steel prices ads about $200.00 to a car price. (Surely not pocket change).
Steel is used in the exterior portion of the cars (frame, bumpers, etc.). Automakers generally buy about $1,000 worth of steel for each new car. Due to the competitive nature of car sales and the relatively low markup margins at dealers, any increase in steel will be passed directly to the consumer. Larger vehicles, such as SUVs and Trucks will see the biggest increase from high or low steel costs.
Steel Prices are currently decreasing (http://www.cruspi.com/). However, as with all market economies, prices continue to fluctuate. In addition, it may take at least a year before consumers can reap the benefits of the current decline.
Bottom line:
Don’t let steel prices affect your decision on buying a car. Our research indicates that your car price will only fluctuate at most $200.00. There are more important factors to help you understand when you can get the best price on a car.