Even as President Donald Trump attempts to introduce tariffs on steel and aluminum, it’s unclear what effect they could have on Bath Iron Works.

Trump wants tariffs of 25 percent for steel and 10 percent for aluminum, ostensibly to encourage American manufacturing and increase domestic supplies for the defense industry. The tariffs would likely increase the cost of steel to domestic manufacturers, including BIW.

Steel is an integral material for the shipbuilder: The Arleigh Burke-class destroyers built by BIW consist of an all-steel construction. With a length of more than 500 feet, it takes a lot of steel to build an Arleigh Burke-class destroyer.

The Zumwaltclass destroyers, built entirely at BIW, also boast a steel hull and are approximately 100 feet longer. Though the first two ships in the series had a deckhouse built from composite materials, the third and final destroyer, the future USS Lyndon B. Johnson, will have a steel deckhouse. BIW won a contract from the Navy to design and construct the steel deckhouse for $212 million in 2013.

BIW declined to comment on how the proposed steel tariff would impact the shipyard.

The effect on future competitions for work would likely be minimal as BIW representatives have stressed that material costs are essentially equal with competitors and have a minimal impact on competitions for contracts.

“We bid fixed price against one other competitor,” said BIW Vice President and General Counsel Jon Fitzgerald during a recent work session in Augusta. “We know what the price of the materials, the engines, the radar, all that stuff — that’s roughly equal.”

Higher steel prices, however, could affect BIW’s profit margin for ongoing ship work.

The Navy currently uses fixed-price incentive contracts for destroyers, which push more of the risk for cost overruns on contractors like BIW. Part of the reasoning for fixed-price incentive contracts is to provide larger profit margins that come in under budget, while projects that come in over budget may result in smaller profit margins.

Still, the Pentagon has offered its support for the proposal.

In a recent memo supporting the targeted steel tariffs, Secretary of Defense James Mattis stated that “the systematic use of unfair trade practices to intentionally erode our innovation and manufacturing industrial base poses a risk to our national security.”

“DOD does not believe that the findings in the reports impact the ability of DOD programs to acquire the steel or aluminum necessary to meet national defense requirements,” he said.

A recent Congressional Research Services report supports Mattis’ claim.

“The surface combatant construction industrial base also includes hundreds of additional firms that supply materials and components,” said Ronald O’Rourke in a Dec. 8, 2017, report. “The financial health of Navy shipbuilding supplier firms has been a matter of concern in recent years, particularly since some of them are the sole sources for what they make for Navy surface combatants.”

Pentagon support

• IN A RECENT MEMO supporting the targeted steel tariffs, Secretary of Defense James Mattis stated that “the systematic use of unfair trade practices to intentionally erode our innovation and manufacturing industrial base poses a risk to our national security.”