Analysts Say Trump’s Tariffs on Uranium Will Do Nothing for Trade

JM Ashby
Written by JM Ashby

Commerce Secretary Wilbur Ross announced this week that his office is considering tariffs on imports of uranium to go along with the other products that have been taxed in the name of "national security."

The misguided idea is that imposing tariffs on foreign imports will increase domestic production, but that hasn't been the result of Trump's tariffs on steel and aluminum and it probably won't be the result of possible tariffs on uranium.

Investment banks and analysts who spoke to Bloomberg say a tariff on uranium will do nothing to reverse our trade deficit because we simply consume too much uranium.

The investigation is likely to be neutral for the uranium spot price as “the global uranium trade balance is unlikely to shift in a major way, and the spot price is therefore unlikely to move much,” a Berenberg research team wrote. The U.S. accounts for 29 percent of worldwide demand for uranium, but domestic miners supply only 1.8 percent of the global supply. This creates a huge gap for these miners to fill and who will be looking at a premium price point in order to sustain their business, the team added.

In other words, domestic production will never meet our demands and the trade deficit will remain. Imposing a tariff will ultimately raise prices for no substantiated reason.

Analysts also say a tariff on foreign uranium will increase the value of domestic uranium mining companies, but that seems obvious. Trump's tariffs on steel and aluminum also increased the value of those industries, but only for a short period of time before they fell back down to the ground and began declining in value.

Trump and the GOP's refusal to pass a meaningful infrastructure bill means there's simply no demand to support increased production even if Trump's tariffs would make production more lucrative.

There's no one to sell it to at a volume that would make any difference.

We're talking about uranium and simple metals here, but this could apply to virtually anything. We have trade deficits because Americans consume far more than we produce. It's really that simple. We owe a great deal of our current standard of living to the availability of imports.

  • Mark Cleary

    We consume more than we produce because we consume stupidly. If we bought American cars instead of Japanese pieces of crap, we would need to produce more. If we would replace all coal-fired power plants with nuclear, we would mine more uranium. If people insisted their electronics be American, American companies would make them here.

    Protecting American producers is what Trump campaigned on, but typically for an idiot, he’s doing the opposite.

  • This trade war is so stupid and unnecessary. And once the economy crashes and we have a Democratic president they will blame it all on him or her. This cycle of stupidity is maddening.

  • muselet

    Donald Trump and the people around him, to the extent they can be said to have an economic philosophy, are mercantilists: a government should strive for trade surpluses—historically, in the form of precious metals—and protect domestic producers.

    Mercantilism isn’t utter bollocks, exactly, but it’s a pretty crude way to view trade and economics, if for no other reason than it fails to consider the value of intangibles like intellectual property, and American IP (movies, books, software) is valuable beyond the price of gold.

    Looking at any one commodity—steel, uranium, pâtė de foie gras, whatever—and panicking over a trade deficit in that commodity is madness; applying tariffs on that commodity on national security grounds, doubly so.

    And since mercantilism is associated with a volatile world economy, with lots of downturns and recessions, I now get to repeat what I’ve said too many times in the past year and a half: no good thing will come of any of this.