Fears of a trade dispute between the United States and foreign economies erupted yesterday after President Donald Trump announced a plan to impose strict tariffs on steel and aluminum imports.
The order would set tariffs of 25 percent on imports of steel and 10 percent on those of aluminum, a move that Trump asserts would provide protection for American industrial workers.
The announcement sent stock markets reeling and escalated tensions with major trade partners, including China, Canada and the European Union.
“We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk,” warned Jean-Claude Juncker, president of the European Commission. “The EU will react firmly and commensurately to defend our interests.”
But it’s not just foreign countries that would feel the ramifications of Trump’s plan. With the order to come as early as next week, the tariffs would not only raise costs for local consumer goods manufacturers but also impact both small and midsize businesses that used steel and aluminum in any measure, according to several trade organizations.
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In a statement, the Retail Industry Leaders Association — a trade organization of more than 200 retailers, product manufacturers and service suppliers (with Target Corp., Walmart Inc. and J.C. Penney Corp. Inc. among its members) — expressed alarm at the sudden action.
“If broadly applied, these tariffs will have a downstream impact on every sector and will raise the stakes for other countries to take retaliatory measures that will hurt America’s exporters,” RILA VP of international trade Hun Quach said in the statement. “The administration’s desire to challenge other countries’ trade violations is an important goal for free and fair trade, but a broadly applied tariff could spark a potential trade war that zaps consumer spending and American exports.”
Another leading advocacy group, the Small Business and Entrepreneurship Council, voiced its disappointment. Referring to the tariffs as essentially “new taxes,” president and CEO Karen Kerrigan contended that the move would cause unintended consequences.
“The action, unfortunately, cuts against the many positive policies the administration has championed and advanced to make the U.S. more investment- and business-friendly,” Kerrigan said. “These big industries that President Trump wants to protect against the forces of competition will do just fine if he keeps moving policy in a direction that makes America the best place in the world to do business.”
According to the International Trade Administration, the U.S. remains the world’s largest importer of steel, with Canada, Brazil and South Korea serving as its biggest sources of the product. It has maintained a persistent trade deficit in steel for more than a decade, importing about four times as much steel than it exported last year. The country’s aluminum industry has also dwindled over the last 25 years, retaining only five operational smelters from its original 23 in 1993.
Suspecting that these new tariffs — by potentially dipping into the disposable income of U.S. consumers — could also create some trickle-down effects on footwear, Matt Priest, president and CEO of the Footwear Distributors & Retailers of America, was critical of the potential order.
“It’s no secret that the FDRA has been concerned about the trade policies of the Trump administration,” Priest told FN. “High tariffs on imports don’t help create jobs in the U.S. — whether in manufacturing, supply chain logistics or elsewhere. The footwear industry — with tariffs as high as 68 percent on some products — is the poster child for this sort of trade policy not being good for the country or economy.”
He added, “Why — at a time when disposable income is up — would the Trump administration want to impose a tariff that drives up the cost of products that rely on aluminum and steel, by creating a hidden tax? Such a move could impact the shoe industry since the less disposable income consumers have, the less they’ll be able to spend on footwear.”
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