Los Angeles, CA — A broad swath of U.S. industries is unhappy with the tariffs that the Trump administration is imposing on aluminum and steel imports, warning the penalties will jack up costs, raise prices for consumers and potentially put people out of work.
Despite objections voiced by many business trade groups and lawmakers, the White House forged ahead Thursday with its plan to levy tariffs of 25 per cent on imported steel and 10 per cent on aluminum. The tariffs, which President Donald Trump says are needed to protect U.S. workers, are scheduled to take effect in 15 days.
Several industry trade groups pushed back against the necessity of the new policy, saying the tariffs will lead to higher costs for businesses and could spark a broader trade war.
“Today’s action could ultimately cost far more American jobs than it would create, and raise costs on consumer products,” said Gary Shapiro, president and CEO of the Consumer Technology Association, which represents more than 2,200 companies.
“The imposition of tariffs will undoubtedly result in previously uninvolved sectors being retaliated against and create a dangerous race to the bottom, which is a threat to our domestic economy and the entire global trading system,” Shapiro added.
U.S. automakers are among the businesses with the most at stake, given they account for 38 per cent of the aluminum and 15 per cent of the steel consumed in the country, according to Ward’s Automotive Reports.
There are about 1,100 pounds of steel and 400 pounds of aluminum in the average two-ton U.S. vehicle, according to the Center for Automotive Research, an industry think-tank in Ann Arbor, Michigan.
The Alliance of Automobile Manufacturers, a major industry trade group, warned the tariffs will also drive up the price of steel made in the U.S. — a cost that it predicts will be passed along to consumers through higher prices on vehicles.
If the entire cost is passed to consumers, which may not be possible, it could add about $300 to the price of the average vehicle, said Kristen Dziczek, director of Center for Automotive Research’s Industry, Labor & Economics Group.
But automakers could absorb price increases or figure out some other way to offset the increases, Dziczek said. Plus, companies usually lock in steel and aluminum prices with long-term contracts, so it could take years for price increases to kick in, she said.
General Motors doesn’t expect the tariffs to hurt that much, partly because of its long-term contracts.
“We have shown we have the ability to adjust and adapt to a variety of market changes around the world and that will be our approach on this issue as well,” said the company that owns popular auto brands such as Chevrolet, Buick and Cadillac.
Beer lovers also may feel the ripple effects of the tariffs, according to the Beer Institute, a trade group representing the world’s largest brewers. It estimates the 10 per cent tariff on the aluminum encasing most of the beer sold in the U.S. will increase the cost of the beverage by $348 million annually and threaten more than 20,000 jobs in the industry.
“Imported aluminum used to make beer cans is not a threat to national security,” said Jim McGreevy, the Beer Institute’s CEO.
The tariffs would have a far reaching impact that goes beyond beer cans and cars to other products that people wouldn’t expect, such as furniture and lamps, said Hun Quach, vice-president of trade at the Retail Industry Leaders Association, a retail trade group counts such members as Walmart, Best Buy and Home Depot.
Quach dismissed Commerce Secretary Wilbur Ross’s recent comments that these tariffs would mean insignificant price increases on cans of Campbell soup and Coca-Cola. She argued that view doesn’t take into account the volume of cans and other items that companies have to buy that would result in significant costs to their bottom line.
The tariffs also come at a time when retailers are rushing to remodel their stores and build huge e-commerce distribution centres that require steel, Quach noted.
“Our point is that these tariffs are going to have a bigger impact on our American economy than what their goal is,” she said.
The head of the National Retail Federation, whose members include department store chains, grocery stores and other merchants around the world, also raised objections to the tariffs Thursday, calling them a tax on all Americans.
“A tariff is a tax, plain and simple,” said Matthew Shay, president and CEO of the NRF. “Consumers are just beginning to see more money in their paychecks following tax reform, but those gains will soon be offset by higher prices for products ranging from canned goods to cars to electronics.”
Housing trade groups also took a dim view of the tariffs, saying the policy would lead to higher costs and hinder development at a time when the nation faces a severe shortage in homes and rental housing.
“Policies that increase the cost of development stand in the way of meeting urgent housing demand as well as imperil the economic and employment gains achieved through tax reform,” said Cindy Chetti, senior vice-president of government affairs at the National Multifamily Housing Council, which represents 1,200 apartment housing owners, managers, developers and investors.
The National Association of Home Builders noted the tariffs would pile on more costs on builders and, ultimately, homebuyers.
The tariffs could lead to job losses at aerospace and defence companies, said Eric Fanning, president and CEO of the Aerospace Industries Association, which represents more than 300 manufacturers and suppliers.
The tariffs are welcome news for aluminum and steel companies, however.
Even before Trump signed off on the new tariffs, U.S. Steel provided him with a proof point for his rationale by announcing it would reopen part of a Granite City, Illinois, plant that closed in 2015 in a move that the company blamed in part on “unfairly traded imports.”
The reopening will bring back about 500 U.S. Steel workers who had lost their jobs in the closure.
U.S. Steel CEO David Burritt hailed Trump for taking steps “to begin to level the playing field so companies like ours can compete, win and create jobs that support our employees and the communities in which we operate as well as strengthen our national and economic security.”
Lietdke reported from San Francisco. Associated Press writers Tom Krisher in Detroit and Anne D’Innocenzio in New York also contributed to this report.