Trade tariffs could create a world of hurt

opinions

March 5, 2018 - 12:00 AM

In small town America, we try to “buy local” even if it means paying slightly more.
We do so out of loyalty — and convenience — because it keeps our merchants in business.
President Donald Trump’s decision to slap tariffs on steel and aluminum imports takes that “buy local” stance to a national scale, backing U.S. manufacturers into a corner.
Mr. Trump has proposed tariffs of 25 percent on steel and 10 percent on aluminum.
Industries most affected are those that make automobiles and aircraft and the construction trades. Mr. Trump’s logic is to make imports of those raw materials so high that it forces U.S. manufacturers to buy local.
The move stands to benefit a handful of industries and about 140,000 U.S. steel workers.
On the flip side of that argument is that a heckuva lot more employees — 6.5 million — work for industries that use steel and aluminum than for those who make it.
By forcing out foreign competition, Mr. Trump is putting U.S. steel and aluminum producers in the enviable position of being able to raise their prices to match those of the tariffs.
Then we’ll all hold our breath to see what the market will bear.
At the news, Ford Motor Company’s stock dropped by 3 percent; GM’s by 4 percent, because, yes, auto manufacturers will pass the price of higher goods on to the consumer. Foreign automakers are delighted at the thought that their products will become even more competitive with U.S.-made cars and trucks.
On Friday, Swedish-based Electrolux put on hold a planned 400,000 square-foot expansion of a plant in Tennessee, in reaction to the tariffs. Electrolux uses both steel and aluminum in the manufacture large appliances.
Anheuser-Busch and MillerCoors also predicted job layoffs at the prospect of higher-priced aluminum for that can of beer.
Analysts predict that instead of buying the higher-priced raw materials, U.S. manufacturers will instead buy the finished product from abroad.

PRESIDENT Trump has made no bones about the protectionist stance and scoffs at the idea that it will trigger a global trade war.
Meanwhile, the leaders of France, Canada, Germany and China all relayed Friday that if the United States enacts the tariffs then they will be forced to retaliate in like manner to U.S. exports, including Kansas-based grain and meat products.
In reality, Mr. Trump’s policy is pretty site- and industry specific and could backfire in untold proportions. That’s not putting America first.

— Susan Lynn

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