Economy Fail

Report: Trump’s Tariffs on Imports Are Leading to More Imports

JM Ashby
Written by JM Ashby

If he's capable of articulating the purpose of his tariffs at all, Trump would probably tell you the goal is to reduce imports and our trade deficit.

Unfortunately for him, Trump's tariffs could just as easily lead to more imports for reasons that industry experts have been predicting since last summer when Trump first began floating the idea of starting a trade war.

Trump's tariffs on steel and aluminum have increased costs for industries that use metal inputs to create products and, as a result, clients are importing finished products that aren't subject to tariffs instead of assembling them here.

From the Wall Street Journal:

U.S. steel producers are benefiting from tariffs that make it more expensive for companies to buy the metals overseas. But some U.S. firms that use the metals to make everything from refrigeration parts to wheels say the tariffs have led to higher materials prices that are forcing them to charge more for their products. These firms say that in some cases, customers are turning to foreign suppliers that use cheaper, tariff-free metals to make the same products they can then export to the U.S. without bumping up against the new trade barriers. [...]

One option for manufacturers with established supply chains abroad is to shift production outside the U.S. to take advantage of lower costs.

“A few of our customers have moved some of their production back to Europe and Canada because of the increases in prices for raw materials,” said Jerry Pines, chairman of Millenia Products Group, a fabricator based in Itasca, Ill. Mr. Pines said the effect of tariffs on pricing and availability “has made the marketplace the most difficult place to operate in the 50 years I have been in the steel business.”

You may recall that industry experts have also predicted that changes to the North American Free Trade Agreement (NAFTA) proposed by Trump's trade representative Robert Lighthizer would also lead to more imports for very similar reasons.

Industry sources say higher content thresholds (and exclusive quotas for car parts produced in the United States) for automobiles manufactured in North America under NAFTA would lead to more imports of fully assembled cars because that would be cheaper than building them here under the new rules. That could lead to hundreds of thousands of job losses at manufactures that produce cart parts and auto assembly plants in the United States.

The bad news is this information is unlikely to change the Trump regime's thinking to the extent that they actually think anything through.

Acknowledging that their policies will have unintended consequences would require admitting fault. That's not something they're accustomed to.

  • These policies are so obviously terrible for Americans that sometimes I wonder if Trump isn’t just an idiot who doesn’t know what he’s doing, but a willing pawn of Putin, actively trying to hurt America.

  • ninjaf

    Industry sources say higher content thresholds (and exclusive quotas for car parts produced in the United States) for automobiles manufactured in North America under NAFTA would lead to more imports of fully assembled cars because that would be cheaper than building them here under the new rules. That could lead to hundreds of thousands of job losses at manufactures that produce cart parts and auto assembly plants in the United States.

    I guess those Trump voters in Macomb County Michigan are really going to be feeling some “economic anxiety” now. Will they blame Democrats again?

    • KanaW

      Of course they will. Because Faux Noise will tell them it’s the Democrats’ fault. And they will believe it.

  • muselet

    A tariff is, at best, a blunt instrument. At one time, before the world became interconnected and interdependent, tariffs served some economic purpose (not much, but some).

    Now, though, production can be moved around the world and new sources of raw materials and component parts can be found quickly. It’s a nuisance and an unnecessary expense, but it can be done. The blund instrument of a tariff isn’t quite useless, but it comes awfully close. Tariffs just increase costs and prices.

    I suppose a clever protectionist could come up with a measure that would actually work, but I can’t imagine what it would be; besides which, protectionists tend not to be clever.

    –alopecia