Anyone who's followed the news cycle over the past three weeks knows there's been a ton of talk about steel tariffs.
On March 8, President Donald Trump signed two proclamations that impose a 25 percent tariff on five classifications of steel and a 10 percent tariff on six types of aluminum products against all countries except Canada and Mexico, effective March 23.
This set of a firestorm of blowback from global manufacturers, U.S. trading partners and government officials who lament the new tax order, saying it will cost the U.S. jobs, raise consumer prices and hurt American manufacturers. Some of those newly-taxed countries have threatened retaliation, with the European Union warning it would impose a 25 percent tax on imported American goods, while China has threatened a trade war. In fact, 45 trade associations across the technology, retail, agricultural and consumer goods industries are petitioning the tariff in a letter sent to Trump on Sunday, March 18. The letter includes big-name companies like Apple, Google, IBM, Nike and Walmart.
On the other side, industry analysts say the tariffs may help regional manufacturing, leading to factories re-opening closed steel mills or adding new ones as they respond to increased demand for domestic steel and aluminum. But others still question that tactic, saying that even marginal increases in raw material prices may strain middle manufacturers that rely on large quantities of steel.
No matter which side's take on the matter is more accurate, it seems inevitable that these tariffs would result in a considerable impact on the industrial distribution/supplier market, where countless industrial products are comprised of foreign steel or aluminum.
There's at least one prominent executive in the industrial distribution market who has an unfavorable view of these Trump tariffs. John Wiborg, founder and president of Tacoma, WA-based Stellar Industrial Supply and chairman of the Industrial Supply Association, recently gave the following statement to MartinLevyPR:
The needs of the few cannot outweigh the needs of the many. Ostensibly protecting one slice of our manufacturing economy at the expense of many other slices that make the majority does not make economic sense. I’m not sure how much of all this has to do with protecting jobs and improving our economy directly; it looks more like a negotiating ploy. If it is, and it works, these new tariffs may not last very long. To me, not a great bet. Generally, tariffs and trade wars do not do anything good for the broader U.S. Economy. Primary metals producers may initially benefit but other manufacturers will see increases in materials costs that will have an overall negative effect on investment and job creation. If trade wars break out, that only gets worse. And tariffs historically have led (certainly not always) to actual shooting wars. Having said that, I do not believe the United States should tolerate (or promote) wildly unfair trade practices. In my view, if you want wealth creation that leads to jobs and a better standard of living for the broadest swath of people, you establish growth-oriented policies. Those policies should be aimed at reducing costs of capital, labor, materials and operations - including the significant regulatory burden businesses face. One would also want to foster competition which leads to improvement and innovation. Allowing capital to flow freely to where it can best be deployed to create growth, innovation and the resulting improvement in standards of living makes economic sense. Tariffs are the opposite
So, what do you think? Does your take on the steel and aluminum tariff situation echo Wiborg's, or do you see more positive potential? Let me know in the comments below.
