Donald Trump’s tariff has been met with varied reactions across the board, particularly the 25% tax rate for imported steel and 10% for aluminum of into the USA. According to CNBC, blue-collar industries were very pleased with the announcement, whilst titans of the metal industries were concerned that the tariff would bring about damaging effects upon the larger companies.
The USA boasts the largest production volume of steel in the world, with 1.7 billion metric tonnes produced in 2017. The nation is also the world’s biggest importer of steel, importing over $29 million worth of steel in 2017. The donor’s list is lengthy and consists of 110 countries and territories.
The President of the United States remarked many times throughout his presidential campaign that part of his promise to “Make America Great Again” included protecting national security and saving jobs for American citizens. The introduction of the new tariff and its tax rates is seen in the light of Trump coming true on his promise. As a result, Trump expects US steel and aluminum manufacturers to boost the cost of raw materials
The demand for steel and aluminum is widely acknowledged to be much greater than the supply that the US can produce. However, the president has said that the cheap imports from foreign countries such as China have weakened the metal industry in the US. Having described the import trade and volume as “disgraceful treatment” from other countries, the tariff may start trade wars as an impetus to boost the American economy.
The Dow Jones Industrial slid 600 points immediately after the announcement. Steel and aluminum are used in many American industries, such as building refrigerators, cars, bridges, scaffolding, and roads amongst many others products. The dip in the stock market reflects the general consensus that the president’s latest move is consistent in nature with a long line of controversial decisions whilst in office.
Several trade groups and businesses have given their thoughts on the imposed new tax rates. Miller Coors is the second-largest beer brewing company in the US and has said they purchase as much domestic aluminum as possible, but the demand far outweighs the supply and buying from imported sources is inevitable.
H. O. Woltz III, chairman of Insteel Industries, said that the president’s decision would result in an increase of job losses. Mr. Woltz said the rise in domestic prices would force him to charge higher fees and encourage customers to purchase from foreign competitors, who do not charge the same for raw materials.
The tariff is estimated to result in a net decrease of 140,000 employed Americans, with a boost of 30,000 jobs created in the metal industries, but a loss of 170,000 jobs for companies that rely on steel and aluminum.
Analysts believe Asia, which produces two-thirds of the world’s steel, will experience only minor economic effects due to the new tariff. As a result, metal stamping industries such as Eigen Engineering are not expecting fluctuations in their volume of trade.
The trickle-down effect for consumers is yet to be seen and is dependent on how industries relying on steel and aluminum, such as Miller Coors, handle increased costs.
International support may waver in the face of this new tariff, as the European Union, Mexico and China have declared retaliatory tariffs are being considered for industries like agriculture. Steel accounts for 2% of global trade, whilst the agriculture sector is worth 10% global GDP.
The US economy is currently experiencing an upswing. Some observers say an expected 3% growth, in addition to hundreds of thousands of jobs, are at risk if the Trump administration perseveres with the tariff.