The announcement by the White House that President Trump had decided to impose a 25% import tariff on all steel being shipped into the United States sent the stock market reeling yesterday. In addition to steel, the administration also is imposing a 10% tariff on aluminum imports as well. Hearing the news of the tariff’s, Investor’s hit the sell button, and Wall Street was hammered for over 400 points in the wake of the announcement. Early indicators say that stocks once again today will likely be again headed in the same direction.
On the surface, this seems like a great deal for America’s steel corporations. However, when peeling back the skin and looking beneath the surface, I am second guessing the President’s decision to slap a tariff on all steel and aluminum imports. Currently, there are some 26 steel manufacturers globally. Of those 26, only two reside within the confines of the United States. The President’s decision was based on “creating a level playing field” for American manufacturers,” however we only have two companies. The President claims that these tariffs will create jobs is problematic at best in my opinion.
For United States Steel Corporation to “expand” and create any significant amount of good paying jobs, you’re talking about years to accomplish this endeavor. First U.S. Steel would have to ramp up the ability to manufacture a greater volume of steel. Then the company would have to create more sales to warrant the expansion. Most likely the company would have to construct more buildings, possibly purchase more land and all the rest of the due diligence required to expand. In other words, U.S. Steel won’t be hiring 1000 new workers next week.
The immediate fall out from these newly imposed tariffs will be a spike in the price of steel, and these costs will be passed along to the consumer. You can expect higher costs for automobiles, heavy machinery, tractors, and most anything else that contains steel. How about buildings? Many buildings today are constructed mostly of steel. You can expect a dramatic rise in the price of these. Where an office building that once priced out for $500,000 will now be much more expensive.
These new tariffs won’t make the baseball and football fans across America very happy either. You can now expect your favorite beer and cola cost to go up as well. The 10% tariff on aluminum will likely affect the cost of a 6-pack of Coors also.
Needless to say, our friends to the North in Canada are not very happy either. The Maple-Leafs are already discussing “how to retaliate” against the President and his new economic trade policies. The European Union, along with Mexico, China, and Brazil are the most prominent players in this tariff taxing action, and all are predicting a significant trade war.
My personal opinion is this; To start an international incident over two American corporations plus only a handful of aluminum companies, I have to say that I’m not sure this is worth it. Someone once said; “Pick your Battles, and is this the hill, you really want to plant your flag on?” I realize that America was once the global leader in steel production. But to drive the cost of the product up which will no doubt cause the rise in many consumer goods, I am just not so sure this is worth it at this time. We have way too many issues transpiring at this moment in time. With North Korea, Iran, Russia Gate, Guns and so many more calamities transpiring, I think that maybe the President has too many balls in the air right now. Just my thoughts!
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