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While more than one hundred Republicans have implored President Trump to rethink his plans to impose tariffs on aluminum and steel, which could, in turn, lead to a trade war, the president is expected to nonetheless approve the measures this afternoon.
WHAT IT MEANS: Earlier this week, McClatchy reported on North Carolina beer producers who were worried about the new tariffs. Aluminum, after all, goes into beer cans; steel goes into pretty much everything else a brewery has. Tariffs will raise prices on that stuff, which means beer will get more expensive. This is a microcosm of the problems with tariffs generally: sure, they will benefit steel and aluminum manufacturers, but at a cost to industries (automobiles, construction) and the consumers who rely on them. So for every dollar of new manufacturing generated, it’s likely that many more will come out of the pockets of everyday consumers. And that’s ignoring other countries’ retaliation, which could hurt some domestic manufacturers, and the possibility of an all-out trade war, which, contra Trump, no one will win.
While more than one hundred Republicans have implored President Trump to rethink his plans to impose tariffs on aluminum and steel, which could, in turn, lead to a trade war, the president is expected to nonetheless approve the measures this afternoon.
- From the Times: “Mr. Trump has said the tariffs would apply to countries across the board and that any exemptions could open a Pandora’s box of requests for special treatment. That has prompted stiff blowback from trading partners, Republicans and the financial markets, which sank over fears that across-the-board tariffs would incite retaliatory action that stunts the United States’ economic growth. It also prompted the resignation of Mr. Trump’s top economic adviser, Gary D. Cohn, who had argued against broad tariffs and said on Tuesday he would leave the White House in the coming weeks.”
- With Cohn gone, Trump’s economic advisers have “a much more binary view of trade, seeing it as a zero-sum game in which the United States is losing. The advisers have pushed the president to withdraw from trade deals like Nafta and to carry out the type of stiff tariffs that Mr. Trump seems poised to impose on steel and aluminum imports. They see the United States’ ballooning trade deficit, which hit a nine-year high on Wednesday, as evidence that more needs to be done to put the country on the winning end of
global trade.” - For now, the tariffs will temporarily exempt Canada and Mexico, an effort to give the administration leverage to renegotiate NAFTA [WaPo]: “One version of the plan, which was still being finalized ahead of an expected announcement on Thursday, would give Canada and Mexico a 30-day exemption from the tariffs, the officials said. The exemptions could be extended based on progress in renegotiating the North American Free Trade Agreement.”
- The European Union is already planning its retaliation: “European Union officials unveiled an array of tariffs on Wednesday that they would place on American-made goods if the United States followed through on President Trump’s plan to impose penalties on imported steel and aluminum, raising the specter of a trade war. … A provisional list of items being targeted ranges from steel to T-shirts, also including bed linen, chewing tobacco, cranberries and orange juice, among other products. The overall size of the business affected is relatively small, worth about 2.8 billion euros, or $3.5 billion, in imports, paling in comparison with the nearly €250 billion of goods the 28-nation bloc bought from the United States in 2016. … While retaliation from Brussels appears limited for now, it could have an impact on American domestic politics. Bourbon, one of the products that European officials have targeted, is made in Kentucky, the home state of Mitch McConnell, the Senate majority leader. Other items that could face tariffs are motorcycles, and the corporate headquarters of Harley-Davidson are in Wisconsin, [House Speaker Paul] Ryan’s state.”
- “The United States is the world’s largest importer of steel, and while many of Mr. Trump’s arguments have focused on cheap steel from countries like China, the European Union as a whole is the single biggest exporter of steel to the United States.”
WHAT IT MEANS: Earlier this week, McClatchy reported on North Carolina beer producers who were worried about the new tariffs. Aluminum, after all, goes into beer cans; steel goes into pretty much everything else a brewery has. Tariffs will raise prices on that stuff, which means beer will get more expensive. This is a microcosm of the problems with tariffs generally: sure, they will benefit steel and aluminum manufacturers, but at a cost to industries (automobiles, construction) and the consumers who rely on them. So for every dollar of new manufacturing generated, it’s likely that many more will come out of the pockets of everyday consumers. And that’s ignoring other countries’ retaliation, which could hurt some domestic manufacturers, and the possibility of an all-out trade war, which, contra Trump, no one will win.
- But how much individual areas will be affected by this move depends on how much steel and aluminum they import. Thanks to a new report from the Brookings Institute, we can get a sense of what this will mean for North Carolina.
- “When measured by total volume, the nation’s largest states dominate steel and aluminum imports. Texas, California, Illinois, Michigan, Louisiana, Pennsylvania, Ohio, and New York all import more than $2 billion annually in steel and aluminum products, together accounting for 60 percent of the nation’s total. Aside from Texas, California, and Louisiana, these states
concentrate in the Northeast and Midwest’s Rust Belt. Given the large size of their economies, disruptions to trade in these states have significant potential to influence national economic growth and key industry sectors like automotive manufacturing, chemicals, and oil and gas production. However, some states’ production relies more on steel and aluminum, measured by the share of those products that account for total imports.” - “The states that rely most on steel and aluminum imports as a share of their total import base cut an interesting economic geography. In Missouri, Louisiana, Connecticut, and Maryland, aluminum and steel imports account for at least 5 percent of total state imports, double the share of the nation’s 2 percent total. Louisiana presents a particularly notable example. Oil and gas drillers and petrochemical producers in that state rely on imported steel and aluminum to support their operations. The Port of New Orleans imported 2.48 million tons of steel in 2017, accounting for 30 percent of its tonnage. Maryland’s imports are also disproportionately weighted towards aluminum and steel. As the Baltimore Sun reported, Maryland manufacturers of steel products are concerned that they will be put at a disadvantage, both due to higher input costs and by potentially limiting their access to important export markets should retaliatory measures be put in place.”
- In North Carolina, however, less than 1 percent of our imports are aluminum and steel—only twelve states have a lower percentage. Which means our we shouldn’t see that much of a dent, relatively speaking—though your beer, your house, and your car might all cost a bit more. Of course, if China slaps a big
ol ’ retaliatory tariff on, say, pork, that could pose a problem for the eastern part of the state.
