tariffs – Page 2 – * Failed Pols

American farmers will be the real victims of the Trump administration’s recent tariffs on certain imports. Trump has placed a 25-percent tariff on steel and a 10-percent tariff on aluminum imported from China, Canada, Mexico, and the EU, and an additional 25-percent tariff on a number of other Chinese imports. Those countries are retaliating by placing tariffs on certain American farm products.

Agriculture Secretary Sonny Perdue said that the tariffs “are a firm statement that other nations cannot bully our agricultural producers to force the United States to cave in.”

Continuing with the irony, Trump said, in a speech to the Veterans of Foreign Wars, that farmers “will be the biggest beneficiary.”

It’s not clear what Trump meant by “beneficiary.” A variety of farmers will suffer as an indirect result of Trump’s tariffs. Farmers who will feel the most pain are growers of soybeans, but those who raise cotton, wheat, sorghum, cattle, hogs, legumes, nuts, and fruits, have been targeted, as well. Some of the hardest-hit farmers are in those states that supported Trump.

Now the Trump administration plans to come to the “rescue” of American farmers by offering them roughly $12 billion in government assistance. So after severely harming their livelihood, the Trump administration offers farmers relief from its own trade policy.

But the aid is not likely to be enough to fully replace the revenue lost. The damage done by the tariffs will be long-term, and won’t be repaired by a one-time or short-term patch. Smaller farmers are likely to go out of business as a result of their losses. What’s more, farmers want to farm, participate in the global economy, and contribute to the world’s food supply. Most significantly, it doesn’t make sense to attempt to punish other nations (including some of our allies) by ultimately hurting one’s own people, and then implementing a costly system to “help” them.

Senator Bob Corker (R-TN) stated it well: “You have a terrible policy (of tariffs) that sends farmers to the poorhouse, and then you put them on welfare, and we borrow the money from other countries. It’s hard to believe there isn’t an outright revolt right now in Congress.”

Does the emergency aid for farmers offer a solution or more problems? | Washington Post [2018-07-24]

Impact of Trump’s tariffs on his GOP base | Fox Business | [2018-07-24]

The Trump administration has revived a trade practice that has been largely out of favor since World War II: the tariff. Imported metals from U.S. allies Canada, Mexico, and the European Union (EU) will carry tariffs of 25 percent for steel and 10 percent for aluminum. It seems likely that the Trump administration did not fully think through the range of impact these tariffs will have. It wouldn’t be surprising if the administration’s thinking were along the lines of something as simplistic as “So don’t buy any steel or aluminum products.”

But Americans will not be able to avoid the broad impact that the tariffs on steel and aluminum will have. Since steel and aluminum imports will be more expensive, so will the products that contain components made of these metals. Appliances, automobiles, and airplanes will likely be more expensive, as will construction products such as pipes, culverts, wire, and beams. The food industry will also be impacted as cans, packaging, and cookware are likely to be more costly.

Though it’s true that American companies could choose not to use imported steel or aluminum and use only domestic-made metals, we don’t know yet whether American manufacturers can currently supply all of the aluminum and steel that we import.

Even if the American metal industry can meet all of the domestic need for steel and aluminum, costs are likely to rise. With the reduced threat of foreign price competition, American manufacturers could raise their prices.

If American companies do continue to import steel and aluminum and pay the tariffs, their costs will increase. This will result in less profitability, which could force them to raise prices on goods, eliminate jobs, reduce operations, or all of these.

The tariffs on steel and aluminum are likely to cause American stocks to suffer, as well, as Wall Street fears trade wars and the potential loss of profits. When the tariffs were announced, the Dow plunged 252 points, the S&P 500 lost 0.7%, and Nasdaq lost 0.2%.

Earlier in 2018, Trump tweeted, “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win…Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore — we win big. It’s easy!”

Trump appears to think that the U.S. will win this trade war. The evidence, however, as supported by most economists, points to the likelihood that with tariffs such as those on steel and aluminum, it’s Americans who will lose.

Chamber of Commerce launching campaign against Trump tariffs | Fox Business [2018-07-02]

Steel CEOs Push for Waivers From Trump’s Tariff | Seattle Times [2018-07-02]

Tag: tariffs

Import Tariffs: Farmers Are the Real Victims

How Trump’s Steel and Aluminum Tariffs Could Affect Americans