LM    Topics 

Trump’s planned tariff hikes garner decidedly mixed reviews

Saying that President Trump’s announcement yesterday calling for 25% tariffs on steel imports and 10% on aluminum imports was surprising and that can probably be viewed as an understatement to be sure.

There are all sorts of reasons for that, with many experts calling it an unwanted or unneeded initiative certain to spur on a global trade war, with the United States front and center in the middle of it all. Aside from whatever the ramifications of a true trade war would look like, there is, of course, the fall out, or trickle down, impact on what this could mean for consumer spending i.e. the real lifeblood of economic activity, more so than any other economic driver.

In a Tweet, naturally, Trump made his intentions for his planned tariff increasessaying: “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!”

But that does not make it true simply because he says so. That is a key takeaway from many economic and policy experts and members of Congress, as observed in various reports.  

Sen. Orrin Hatch, R-Utah, was quoted in the New York Times as saying these tariffs are “a tax hike the American people don’t need and can’t afford.” 

A drop off in financial market activity and potential retaliatory actions from global U.S. trading partners, especially China, Canada, Mexico and the European Union, have been prominently noted since Trump made his tariff plans clear.

Not surprisingly, Thomas J. Gibson, president and CEO of the American Iron and Steel Institute (AISI), praised Trump’s initiative.

“We thank the president for meeting with our industry, and following through on his commitment to addressing the steel crisis,” he said in a statement. “Foreign steel imports surged again in 2017—up 15 percent from the previous year and capturing 27 percent of the U.S. market. About one fourth of domestic steel capacity today is not being utilized. This is fueled by the massive excess steel capacity in the world today, which is more than eight times larger than the annual output of all U.S. steel producers, and driven by subsidies and other interventionist foreign government policies. That translates into idled plants and the loss of thousands of jobs. We are pleased that the president is addressing this issue and look forward to the formal announcement next week.”

With this news still very much in the early stages, the supply chain and global logistics-type takeaways are not necessarily clear cut, but that does not mean there is a lack of opinion or analysis.

Panjiva Research Director Chris Rogers wrote in a research note that both the timing and structure of Trump’s tariff announcement is unorthodox, while adding that the devil will prove to be in the details.

Shifting back to the aforementioned possibility of retaliatory actions, Rogers pointed out that it could come in the form of more generalized trade actions, as seen from reports regarding forthcoming Chinese agriculture investigations, as well as broader commentary from the EU.”

“The major detail to be resolved is whether any countries are exempted,” he wrote. “A broad-based tariff makes sense given the risk of ‘country-hopping’ should specific countries be targeted. There is also an argument for breadth as the carrot of exemption could be introduced to trade negotiations – particularly those relating to NAFTA and KORUS. Panjiva data shows Canada, Mexico and South Korea accounted for 38.4% of steel and aluminum imports in the past 12 months (Canada 26.2%, Mexico 6.0% and South Korea 6.3%).”

And between now and when the tariffs take effect (Trump says it will be soon), Rogers noted that a late surge of steel shipments could be imminent.

Ben Hackett, founder of maritime consultancy Hackett Associates, blasted Trump’s call for increased steel and aluminum tariffs.

“The announced intent to impose tariffs on steel and other metals by the Trump administration at a time when the word economies are showing strong recovery seems to be ‘shoot yourself in the foot,’ strategy,” he said. “It will no doubt bring retaliation from major trading partners.  The immediate result has seen sharp declines in the global stock markets.  How is that good for America? If the steep tariffs are put into  place expect higher producer costs and lower exports. Again, neither good for the American economy nor the consumer. Perhaps this is for the voter base and the policy may be dropped in a week or two. Nothing is certain anymore in Washington, D.C.”

That last statement is pretty accurate, regardless of your political views. And the possibility of a trade war is something that needs to be taken very seriously and with caution, as it could be the tip of a global trade war iceberg that may only be picking up speed.  

Article Topics

Global Trade
   All topics

Latest in Logistics

With deadline way past due, now is the time for a West Coast port labor deal to be struck
ODFL issues Q2 operating metrics update
C.H. Robinson tabs Bozeman as its next CEO, effective later this month
National diesel average is down, for the week of June 5, reports EIA
Transfix announces partnership with Highway
Logistics Labor: Increasing retention
Voice picking solutions gains impact with integration in the warehouse and beyond
More Logistics

About the Author

Jeff Berman's avatar
Jeff Berman
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review and is a contributor to Robotics 24/7. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis.
Follow Modern Materials Handling on FaceBook

Subscribe to Logistics Management Magazine

Subscribe today!
Not a subscriber? Sign up today!
Subscribe today. It's FREE.
Find out what the world's most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today.

June 2023 Logistics Management

June 5, 2023 · To better manage through the constrained labor market, logistics operations are courting more women and other diverse job candidates; ramping up their training programs; investing in automation; and ensuring that positions offer the work-life balance that many new recruits are seeking.

Latest Resources

Your Road Guide to Worry-Free Shipping Between the U.S. and Canada
Your Road Guide to Worry-Free Shipping Between the U.S. and Canada
Get expert guidance and best practices to help you navigate the cross-border shipping process with ease. Download our free white paper today!
Warehouse/DC Automation & Technology: It’s “go time” for investment
Warehouse/DC Automation & Technology: It’s “go time” for investment
In our latest Special Digital Issue, Logistics Management has curated several feature stories that neatly encapsulate the rise of automated systems and...

Why accurate, real-time location data is a must for efficient operations
Why accurate, real-time location data is a must for efficient operations
Find out how next-generation workforce management apps use accurate, real-time location data to power successful operations in this webinar with Radar CEO...
Should you lease or buy your lift truck fleet?
Should you lease or buy your lift truck fleet?
Leasing critical equipment like lift trucks can offer flexibility, but some lease terms can be complex and costly if you’re not...
2023 State of the Third-Party Logistics (3PL) Industry Report
2023 State of the Third-Party Logistics (3PL) Industry Report
In this year’s Third-Party Logistics State of the Industry Report, you’ll learn about our top trends for the year and...