Trade War Backfire

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by Chris

I just found this on a  Reddit thread…seems legit:

I work for a [midwest US] company that imports steel to make construction and mining equipment.

We import our steel from Canada and the EU so starting yesterday the price of all our raw material went up 25%.

The purpose of the tariffs is to help US steel companies but when we looked into purchasing our steel from them the best price they could give us was 3 times what we pay for steel from overseas, and that doesn’t include the initial startup cost of tooling.

From what I’m seeing the tariff would have to be 300% just to make it viable and even then US steel companies wouldn’t be capable of producing the quantities we need for years.

I spent much of yesterday looking into if there are any viable options in purchasing steel from the 4 countries still exempt from the tariffs. It is not looking promising and we are starting to realize that there may only be one option that makes economic sense and it’s not a good one.

With the 25% increase in the cost of raw material it has now become cheaper for us to order finished product from overseas and ship it in rather than produce it ourselves. We have four facilities in the US currently producing equipment.

If we are forced to make this change to purchasing rather than producing then those facilities will become glorified warehouses and hundreds of people will lose their jobs.

I’ve talked with people at competing companies and they are experiencing the same issues. I’ve been reading that the retaliatory tariffs on farm products are having a big impact in those industries as well. Trump has started a trade war and it doesn’t seem to be working out for anybody.

(Source)

Stupid law of unintended consequences!  By protecting wildly uncompetitive US steel companies, Trump may have put a bullet in a more-than-offsetting number of CAT and other mfg jobs.

READ  Tudor Jones says bet heavily on every inflation trade... DIMON: JPMORGAN 'Stockpiling' Cash... Inflation fears reach fever pitch reach fever pitch
READ  Tudor Jones says bet heavily on every inflation trade... DIMON: JPMORGAN 'Stockpiling' Cash... Inflation fears reach fever pitch reach fever pitch

You’d think someone would have looked into these sorts of issues first.

Luckily the law of unintended consequences does not apply to monetary policy or “”market”” propping/dropping decisions. /sarc

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