Steel & Aluminum Tariffs

Mar 15, 2018International Logistics

Earlier this month, President Trump stated a 25% tariff will be placed on steel imports, and a further 10% on aluminum imports.

Unsurprisingly, reactions to this plan are mixed as the world watches to see if the policy will in fact be implemented as described.


The Cons

The New York Times was quick to explain that the policy is introduced “on the grounds that other countries’ trade practices endanger American national security by undermining domestic production.”

The Times further explains that the policy could have unintended consequences through ripple effects. For example, affected countries may retaliate by ordering new tariffs on American goods with the intent to cause economic issues and that “…the Trump administration’s invocation of national security concerns could set a precedent in which China and other nations are willing to use national security as grounds for tariffs, hurting the ability of the World Trade Organization to arbitrate disputes.”

An opinion piece featured in Forbes also detailed that “these tariffs will hurt the US economy, tax all American consumers, and cost more American workers their jobs than they will protect”. The author explains that barriers to trade are generally bad, specifically those that affect intermediate goods (something used as an input to make something else), like steel.


The Pros

On the other side of the aisle, Tim Timken, CEO of TimkenSteel, immediately voiced support of the plan, stating, “We view it as a very positive thing.” Timken is the fifth generation leader in the 101-year-old-business. He referenced when President George W. Bush imposed a 30% tariff on imported steel back in 2002; the results of that policy showed no change in unemployment and the economy continued to grow.

Business Insider calls for an even larger fix to US trade policy, reporting that the Trump Administration’s plan to impose tariffs on what they see as the global overcapacity of steel and aluminum is long overdue – and just the start of what needs to happen.

Citing a more than $850 billion trade deficit in 2017 (excluding petroleum), Business Insider states that deficits such as these are significantly impacting US employment with an increase in the workforce depending on low-wage/low-hours jobs, detailing, “Domestic prices for goods, excluding food and energy, fell by over 2 percent during the six years ended 2017. And this ultimately trickles down to depressed wages and prices throughout the economy.”

As experts in the area of global supply chain management, TOC Logistics will continue to build relationships with our clients and stay on top of the changing landscape to deliver efficient solutions.


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