TRUMP, MAGA, WILL FIND THEIR TARIFFS WORK AGAINST U.S.

 

Various Sources

Tariffs raise the cost of doing business outside the United States. Yet even firms that manufacture in the United States can be affected, since many rely on foreign parts and materials as intermediate goods.

Whether consumers ultimately feel the impact of those higher costs can vary by industry and product.

Lots of negotiation occurs among a U.S. importer, an overseas producer and any middlemen before a tariff is collected, said Craig Fuller, CEO of FreightWaves, a supply-chain consultancy.

Some companies, including Target, Best Buy and Hyundai, have said they would pass some of the higher costs of the tariffs along to their customers. Walmart, meanwhile, has sought to pressure its Chinese suppliers to lower their costs in anticipation of the tariffs — and has been met with resistance.

Other companies, especially luxury-goods sellers, charge enormous markups on goods they import into the United States and may ultimately decide they can live with hits to already-high profit margins, Fuller said. Other firms that enjoy large market shares will also decide whether they will absorb higher costs to maintain their dominant positions.

Even for companies that absorb the cost of the tariffs and don’t raise prices, there will still be a cost. Those companies will have less money to invest in growing their businesses, which can have a negative impact on the labor market if it leads to laying off workers or not adding jobs.

TARIFFS AND TARGETED COUNTRIES

Steel and aluminum: A 25 percent U.S. tariff on imports of steel and aluminum from all countries took effect on Wednesday, March 12.

European Union: The EU has responded to those metals duties with counter-tariffs on $28 billion in U.S. goods from April. However, the EU delayed the implementation of some of those tariffs until mid-April — including a 50 percent duty on American whiskey, which had prompted Trump to threaten a 200 percent tariff on European spirits.

Canada and Mexico: Trump's across-the-board tariffs on its U.S. neighbors went into effect on Tuesday, March 4. Just two days later, Trump confirmed the US would pause tariffs on goods and services compliant with the United States-Mexico-Canada Agreement (USMCA) until April 2. For its part, Canada retaliated to the steel and aluminum tariffs with new duties on about $20 billion of US goods.

China: Trump has enacted new blanket tariffs of around 20 percent on top of existing 10 percent duties that went into place during Trump's first term. China has responded with up to 15 percent duties on US farm goods such as chicken and pork, which went into effect Monday, March 10.

Venezuela: Trump said the US will impose a "secondary tariff" on Venezuela, to take effect on April 2 — any country that buys oil or gas from Venezuela would face a 25 percent tariff when trading with the US.

Bringing manufacturing to the United States can also increase the cost of production, because labor,

regulatory and building costs are higher in the United States, which in turn could raise the prices of end products for consumers. If companies do bring production to the United States, the number of jobs could also be limited because manufacturing has become more automated. Auto plants or steel mills that once employed tens of thousands of workers now employ just several thousand.

Building manufacturing plants in the United States could get even more expensive as a result of the tariffs, because it would cost more to import the building materials, parts and equipment needed for the plants.

It could be nearly impossible to make other products, like shoes or T-shirts, in the United States at competitive prices because the United States doesn’t have the available labor or supply chains to make them on a large scale.