The president’s impulsive policy decision is already doing serious damage
President Trump has long felt the United States is getting ripped off when it comes to trade. He’s lamented it at campaign rallies, he’s tweeted about it repeatedly and this year he finally decided to do something about it. It’s a simple fix, Trump reasoned: Just tax the hell out of America’s biggest trade partners. “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,” Trump’s tweeted in March after imposing tariffs on foreign steel and aluminum. “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!”
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!
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It hasn’t been so easy. To the president’s chagrin, the nations he’s trying to punish haven’t bent to his will. Instead, they’re imposing retaliatory tariffs on a number of goods central to the U.S. economy. Trump has responded the only way he knows how: by doubling down with even more tariffs. As a result, American companies have been forced to raise prices, move production overseas, lay off some or all of their employees or even close down production entirely. Last week, TV manufacturer Element Electronics announced it was shuttering its plant in Fairfield County, South Carolina, in response to Trump’s tariffs on steel and aluminum imports. Element was one of Fairfield County’s largest employers. Now it’s gone, as are the jobs of 126 South Carolinians. “The layoff and closure is a result of the new tariffs that were recently and unexpectedly imposed on many goods imported from China, including the key television components used in our assembly operations,” the company wrote in a letter to South Carolina’s employment department.
Element is only one of several companies across a number of industries that have been devastated by the wide-ranging fallout of Trump’s trade wars. Here are some of the ways others are suffering.
In March, Trump imposed a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum, providing exemptions to allies like Canada, Mexico and the European Union. Two months later, he scrapped those exemptions, dealing a blow to pretty much every American company that manufactures products made from steel or aluminum. As it turns out, there are quite a few of them.
Mid-Continental Nail, the nation’s largest nail manufacturer, was devastated when Trump lifted the tariff exemption for Canada, Mexico and the EU in May. The company relied on steel imported from Mexico, and was forced to raise prices after the tariff was imposed. This pushed orders down, and on June 15th, the Poplar Bluff, Missouri, company laid off 60 employees, warning that the entire company could be out of business by Labor Day. “It’s time to end this reckless trade war that has put so many Missourians’ livelihoods at stake — we’ve already seen 60 jobs lost here in Poplar Bluff, and without any action by the administration, we’ll lose hundreds more,” said Sen. Claire McCaskill (D-MO) after touring the company’s plant June. “This is a trade war that’s damaging important alliances around the globe, harming so many downstream jobs across the country, and threatening the workers I visited with today, when we should instead be focusing our resources on going after cheating by China in a surgical manner, rather than the current sledgehammer approach.”
The tariffs have discouraged buying American in the case of American Keg, the only stainless steel beer keg manufacturer in the United States. The Pottstown, Pennsylvania, company — which in March was forced to lay off 10 of its 30 employees — uses U.S. steel, the price of which has risen as a result of the tariffs, forcing the company to raise the price of its kegs, leading consumers to turn to overseas vendors. “We have a lot of patriotic customers that want to buy USA made kegs with U.S. labor and U.S. steel but they’re only going to go so far as that price difference continues to rise,” CEO Paul Czachor told Marketplace.
Brinley-Hardy, an Indiana-based lawn care equipment company, was forced to lay off 75 employees this summer as a result of the tariffs. Like American Keg, Brinley-Hardy used only U.S. steel in its products, but the tariffs have caused steel prices to rise 33 percent since the beginning of the year. “We are collateral damage in this effort. We’re going to be in the same situation as the farmers of needing to save U.S. manufacturing, the company’s owner, Jane Hardy, told the Washington Post, referencing the administration’s recent $12 billion bailout of the crippled agriculture industry.
In January, Trump imposed tariffs on imported solar panels and washing machines. The Solar Energy Industries Association has estimated the tariffs will ultimately result in the loss of 23,000 jobs in the solar industry. REC Silicon, which produces solar grade polysilicon, in July laid off 100 employees — or 40 percent of its workforce — after being forced to dramatically reduce production. Company officials said the layoffs are a “direct result of the ongoing solar trade dispute between China and the United States,” which predates the Trump administration but which the new tariffs have exacerbated. Whirlpoolinitially praised the tariff on washing machines, but since tariffs on raw materials have gone into effect, the company is struggling. “The global steel costs have risen substantially, and in particular, in the U.S., they have reached unexplainable levels,” CEO Marc Bitzer told analysts.
Holland, Michigan, company Trans-Matic shapes metal into auto parts and door lock components, but it has had to raise prices as the cost of steel has soared. This means it’s had fewer orders to fill, leading the company to cut its employees’ hours. “When you cut them back…they get grumpy,” CFO Steve Patterson told USA Today. “This is all causing a bit of chaos.”
In July, construction equipment manufacturer Caterpillar announced it was raising prices in response to the heightened cost of steel and aluminum that resulted from the tariffs, which will cost the company somewhere $100-$200 million. The same week, Coca-Cola announced it, too, would raise prices because of the heightened cost of aluminum. “There is some broad-based push on input costs that have kind of come in and affected ours and many other industries as well,” CEO James Quincey told the Wall Street Journal.
The most highly publicized fallout from Trump’s tariffs has been Harley-Davidson‘s June announcement that retaliatory tariffs imposed by the EU have forced the company to move some of its production overseas. Trump had previously lauded Harley-Davidson as a paragon of American manufacturing. The president did not take kindly to the announcement, choosing — as he is wont to do — to repeatedly attack the company on Twitter for what he perceived as a betrayal.
Harley-Davidson should stay 100% in America, with the people that got you your success. I’ve done so much for you, and then this. Other companies are coming back where they belong! We won’t forget, and neither will your customers or your now very HAPPY competitors!
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Harley-Davidson isn’t the only automaker concerned about the tariffs. In fact, pretty much all of them are. In June, GM warned that any more tariffs could “lead to a smaller GM” and “less investment, fewer jobs and lower wages” for the company’s employees. Around the same time, BMW sent a letter to Commerce Secretary Wilbur Ross explaining that because the tariffs would increase the cost of exporting U.S. made cars to foreign markets, there could be “negative effects on investment and employment in the United States.” Fiat-Crysler has said it is developing manufacturing contingency plans “on a massive scale.” The Ford Mustang is the most popular sports car in China, but after Trump placed tariffs on $34 billion in Chinese goods, the nation slapped a 40 percent tariff on imported U.S. cars. “The company’s clear view is that governments should work together to lower, not raise, barriers to trade,” a company spokesman told ABC News. “Higher tariffs do not benefit our customers or our employees.”
Trump’s tariffs on steel and aluminum have caused the affected nations to retaliate by placing tariffs on billions of dollars worth of American agricultural goods. The tariffs have been so devastating to farmers that the Trump administration was forced bail the industry out to the tune of $12 billion. This isn’t a long-term solution, and while industry leaders try to convince Trump to reconsider his position, the president has threatened to escalate the trade war, saying in July that he is willing to place tariffs on all $500 billion of goods imported from China.
The agriculture industry has roundly rejected Trump’s approach. “American farmers overwhelmingly supported President Trump in 2016 but will not be silent in the face of trade wars that harm U.S. agriculture,” Farmers For Free Trade wrote in a statement released after Trump imposed steel and aluminum tariffs on Canada, Mexico and the EU. “This summer, as lawmakers return home, the voices of farmers who are bearing the brunt of trade chaos and uncertainty will be heard. For many farmers, this is a matter of economic survival. We will continue to fight to ensure the Administration is listening to America’s rural communities in the weeks and months ahead.”
Here are some of the agricultural industries that have suffered the most:
Soybeans: The United States grows $40 billion worth of soy per year, making it the nation’s second-most important crop, behind corn. China buys around half of America’s exported soy, which means that Chinese tariffs on U.S. soy are bad news for farmers. “The math is simple. You tax soybean exports at 25-percent, and you have serious damage to U.S. farmers,” John Heisdorffer, Iowa soybean farmer and president of the American Soybean Association, said in a statement. The ASA has desperately tried to appeal to the Trump administration to reconsider its approach to alleviating the trade deficit, even going so far as to call for individual soy farmers to post pictures of their farms on social media along with statements detailing how the tariffs have impacted their business.
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Pork: In response to Trump’s steel and aluminum tariffs, Mexico slapped tariffs on a number of U.S. agricultural products, including pork — 10 percent initially, then 20 a month later. And in response to Trump’s tariffs on tens of billions in Chinese goods, China imposed tariffs on U.S. pork that, all told, exceed 70 percent. Mexico and China are the top two importers of American pig products, respectively, and these new taxes have thrown the industry into flux. Some are already feeling the effects, like the Illinois-based Maschhoff Family Foods, which stands to lose $100 million annually as a result of the tariffs. “Mexico and China are about 40 percent of total exports, so those are critical markets and it’s a significant concern with U.S. pork,” National Pork Producers Council spokesperson Jim Monroe told CNBC. “The longer these trade disputes go on, and the cloud of uncertainty remains over the industry, it’s going to have real negative financial consequences for U.S. pork producers.”
Dairy: Mexico and China have imposed retaliatory tariffs on close to $1 billion in American dairy products. Prices in foreign markets have risen, making it more difficult to export, and Wisconsin dairy farmers are worried about the ramifications if the tariffs aren’t lifted within a few months. “We are looking at a short-term washout of 20 percent of Wisconsin dairy farm milk income on a monthly basis. That’s how dangerous this mess is,” Pete Hardin, publisher of dairy industry publication The Milkweed, told the Milwaukee Journal Sentinel. “However you want to extrapolate the wider economic impact of a $75 million a month drop in Wisconsin dairy farm revenue, it’s painful.”
The cheese industry has been hit especially hard. Jeff Schwager, president of Wisconsin’s Sartori Cheese, says he expects his company to lose $40 million annually as a result of the tariffs. “I have yet to find an example where tariffs have worked for the long term good of the country that first imposes them,” he told CBS News, adding that “if this is going to go on long term, the customers [in Mexico] will look for an alternative product without the tariffs on it.”
Wheat: U.S. wheat has long relied on overseas markets, and industry leaders are concerned about retaliatory tariffs, especially from China. “We’re so vulnerable in regards to retaliation,” U.S. Wheat chairman Mike Miller told the Capital Press. “We don’t have a single gun in the fight. You can’t say, ‘No, you can’t retaliate against wheat or pork or whatever.’” The organization’s president, Vince Peterson, wrote in a press release that it’s “dismaying to see that common sense has not yet prevailed in preventing these protectionist measures.” He added that “if this administration isn’t careful, decades of efforts by our farmers could be wasted,” referencing the industry’s overseas trade relationships.
These are only some of the sectors of American agriculture that have been hit hard by Trump’s tariffs, which so far have hurt America far more than the nations the president is targeting. Trump’s message is to “be patient” while he waits for the rest of the world to cave to his demands, which probably isn’t likely to happen anytime soon. To convince farmers to hang tight, Trump has shamelessly appealed to their love for America, calling them “great patriots” who “understand that they’re doing this for the country.”
Doing it for the country (read: Trump) isn’t so easy for the farmers whose livelihoods are suddenly in jeopardy. “We have been [patriots],” Ken Maschhoff, whose family-run pork business is suffering, told CNBC. “But I don’t want to be the patriot who dies at the end of the war.”