Impact of Potential Steel Tariffs

Mark Berookim did not write this blog post and the content within this article does not express his views on the topic.

From car plants to bourbon distilleries and farmers to factory workers, the steel tariff announced by President Donald Trump may affect people across many different industries and in various locations throughout the country. States that voted for Trump may be among those that feel the effects most acutely.

Trump’s proposed tariffs are 10 percent on aluminum and 25 percent on imported steel. While he says the tariffs will be good for domestic steel and aluminum production, other industries say the higher prices that are likely to result will harm the economy or might otherwise start a trade war. An analysis by Goldman Sachs concurs, finding that both General Motors and Ford might lose $1 billion annually if steel prices increase. According to the American International Automobile Dealers Association, car prices might go up. Furthermore, other countries, including China and the countries in the European Union, might retaliate with tariffs of their own, resulting in an increase in the price of many goods throughout the country.

Imported aluminum and steel is used to make an enormous variety of products besides cars and planes including medical equipment and kitchen appliances. While the tariffs may benefit steel and aluminum industries and increase foreign investment, that may be offset by the higher costs faced by manufacturers. Consumers in other countries may tend to buy cars that are not from the United States since costs will be lower. Nearly one-third of the jobs in South Carolina, a state that supported Trump, are in the manufacturing and trade industries. Foreign companies may be more inclined to invest if they still wish to sell in the United States but exporting is too costly. This would be to South Carolina’s benefit.

However, retaliation could wipe out any of those benefits. In South Carolina, Boeing employs more than 7,000 workers, and it gets more than 50 percent of its revenue from other countries. China and Canada, two of the top foreign markets for Boeing, have already pledged retaliation. Governments and companies might also turn to European manufacturers. Furthermore, there are four seaports in South Carolina, around 187,000 jobs dependent on trading and 9,000 workers at the world’s largest BMW plant are dependent on the company’s ability to export cars.