Trade

“Anytime they want to take a customer from us, they can do it”

JM Ashby
Written by JM Ashby

Trump's tariffs on imports of foreign steel and aluminum -- tariffs which predate his larger trade war with China -- have cost a broad range of industries a considerable amount of money, but some foreign-owned companies operating in the United States have actually benefited from it.

While most manufactures of metal cans have been harmed by Trump's tariffs, his tariffs have allowed a Japanese-owned company to move ahead of their American competition because they aren't paying tariffs on the specific form of metal they use to produce their cans.

Reuters shares the story of rival manufactures confounded by the intended or unintended consequences of Trump's trade war and the price some American companies are paying to benefit others.

WASHINGTON (Reuters) - One of the largest U.S. producers of aerosol cans, Colorado-based Ball Metalpack, has laid off 91 of its 500 U.S. workers since President Donald Trump imposed a 25% tariff on imported steel that abruptly hiked the firm’s raw materials costs.

At a chief competitor, DS Containers, the story is different. The subsidiary of Japan’s Daiwa Can Co has added more than 80 workers over 18 months at its two Illinois plants, bringing employment to 232.

Rivals of the Japanese-owned firm say the reason for its success is simple - it’s not paying the tariff, allowing the firm to snatch business from competitors who have been forced to raise prices to cover their higher materials costs. The U.S. Commerce Department granted DS Containers an exemption from the import tax because it uses a raw material, plastic-laminated steel, that isn’t produced by U.S. steelmakers.

Firms that use standard tin-plated steel, including Ball Metalpack and Mauser Packaging Solutions, have seen their exemption applications denied or delayed by Commerce after U.S. steelmakers objected to them, arguing the material is available domestically. Executives from the can makers counter that domestic steelmakers can’t produce nearly enough tinplate to meet their needs - forcing them to keep importing and paying tariffs.

“Anytime they want to take a customer from us, they can do it,” said Leslie Bradshaw, an executive vice president at Mauser Packaging, a maker of aerosol and other cans based just 19 miles away from DS Containers in Illinois. “Their business is growing, and everyone else’s is not. We’re paying 25 percent tariffs, and they’re not.”

In short, American manufactures of metal cans are being forced to pay more money for metal while a foreign-owned company is paying nothing to import metal that isn't produced by the American metal industry.

It makes a certain kind of sense to reject exemptions for metal that can be sourced domestically because there would be no point in imposing tariffs if you didn't, but the end result is forcing a larger number of American manufactures to pay more for materials just to benefit a smaller number of American companies in the metal industry.

There should not be tariffs on metal of any kind and if American metal producers cannot compete in a free market, that's their problem.

But Republicans don't actually believe in the free market, do they?

Republicans used to say the government shouldn't pick winners and losers, but the truth is they just want to be the ones picking the winners.

  • muselet

    As I keep saying, tariffs are a terrible idea. They always have been, but they’re even worse in an interconnected world economy.

    The harm done by Donald Trump’s government-by-tantrum style is incalculable.

    –alopecia