President Donald Trump’s tariffs may come at a cost to foreign aluminum and steel producers, but higher prices will most likely hit consumers in the wallet, too.

Trump’s tariffs on imported aluminum and steel will soon take effect. The tariffs, expected to start at the end of March, will bring a 25 percent addition in steel and 10 percent on aluminum imports.

When Trump declared his intention to execute these implement, the primary goal was the protection of U.S. jobs. However, there are hidden costs of trying to protect particular industries. What President Trump is doing, is seen as a potential loss as offsetting the possible gain.

A couple hundred thousand steel and aluminum jobs will surely see increased protection. On the other hand, when increasing prices and potentially squeezing out workers from other sectors, we’re talking about millions of workers.

Price increases on aluminum and steel are anticipated, but what is also expected are cost increases in all products that heavily rely on aluminum and steel as a productive input.

What Products Will be Affected by Trump’s Tariffs?

A tariff is essentially a tax. According to economists, producers will find a way to transfer the extra costs on to consumers, principally in the form of higher product prices.

From a consumer standpoint, soda can producers and beer manufacturers, among many others, will be expecting an increase in price about two to six cents per unit. One study foretells a $300 rise in car prices.

While the increase in the prices of beer and soda probably won’t be high enough to discourage purchases; it might easily influence customers from making certain purchases on a daily or monthly basis. These changes in sales might annually add up to hundreds of millions of dollars.

Beyond protecting jobs and trying to negotiate better deals with trading partners, the president has another stated goal in implementing aluminum and steel tariffs. It has to do with national security: Trump wants to make sure that the U.S. has a minimal manufacturing base, to protect domestic interests, particularly during a wartime economy.

EU Prepares for a Trade War

If other countries reciprocate, will a trade war be next?

European officials have responded with outrage, citing the Continent’s long-standing military alliance and close economic ties to the United States. Brussels has already warned of a steel trade war and is already preparing for it.

The European Commission, the executive body of EU, published a long list of American products—worth approximately $3.4 billion in annual trade—that it would subject to penalties if Trump were to move forward with steel tariffs. The products include everything from orange juice to sailboats. Trump, for his part, has threatened to impose tariffs on European, primarily German, car imports to the U.S. if the EU moves against American companies.

While a negotiated solution is still feasible, what’s problematic about the current situation is the danger of getting into a spiral of unilateral actions.

Contact Cornfield & Partners at info@cornfieldpartners.com or you can call us on +44 (0) 20 7692 0873

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