On Friday, Aug. 10, President Donald Trump announced he would double steel and aluminum tariffs on Turkey. The WSJ’s Gerald F. Seib explains how this political move could backfire. Photo: Getty
Farmers use a lot of steel, which Trump subjected to a 25 percent tariff in March. Combines, grain bins, fencing and cattle gating, which we are constantly upgrading and replacing, have become significantly more expensive as steel prices have jumped because of the tariffs. This has taken a painful bite out of our already-slim profit margins.
.. More than one-third of U.S. soybeans, the second-biggest crop in the nation, goes to China — about $12.4 billion worth. Since May, soybean prices have dipped about $2 per bushel to about $8.50 as export markets have dried up. For every dollar lower a bushel, farmers lose about 10 percent of their revenue.
.. pork exports to China are down nearly 20 percent this year. China is an especially valuable market for pork farmers because it purchases the lower-value portions of the hogs, such as the tongue and ears, that are difficult to sell elsewhere. As a result of the limited export markets, meat is piling up in U.S. cold-storage warehouses. Since May, prices of lean hog futures have fallen by 14 percent.
.. Congress should rally behind potential legislation by Sen. Orrin G. Hatch (R-Utah) that would give lawmakers more say in U.S. tariff policy, in line with the U.S. Constitution. This will allow elected representatives from American manufacturing and farming communities an opportunity to make their voices heard and deliver the message that farmers want trade, not aid.
.. Such legislation would also return tariff power to Congress, whose enumerated powers under the Constitution include the “Power To lay and collect Taxes, Duties, Imposts and Excises.”
.. Trump must listen to his manufacturing and farming constituents who put him in office and pursue trade agreements that help us increase our gross and net earnings without corporate welfare. That starts with shelving plans to open a new front in the trade war with China.
When President Trump imposed a 25 percent tariff on steel imports last month, America’s largest nail manufacturer had little choice but to raise its prices. Mid Continent Nail Corporation quickly lost 50 percent of its orders as customers opted for cheaper suppliers. Within weeks, the firm had to lay off 60 workers. Up to 200 more might lose their jobs by the end of this month.
If the tariff isn’t lifted, the company could fold by September.
Mid Continent and its employees are early victims in Trump’s trade war. There will be many more if the president continues to raise import costs and anger our trading partners... American consumers — not foreigners — will ultimately pay the bulk of the price for these trade obstructions. The economics are simple.
Consider cars. Trump has long made clear that he wants Americans to pay higher prices for cars coming into the nation. On the campaign trail, he promised a tariff of 35 percent on “every car, every truck, and every part manufactured in Ford’s Mexico plant that comes across the border.” This past March, he threatened to impose tariffs on Europe’ automobile manufacturers.
But even cars produced domestically will rise in price thanks to the president’s economically illiterate trade interventions. As raw materials such as steel and aluminum rise in price, the cost of manufacturing each vehicle will rise. Manufacturers will pass those higher costs on to consumers.
Even beer and soda manufacturers are fretting about higher aluminum costs!
The cascade of tit-for-tat tariffs has spooked corporate executives, potentially slowing investment, and the Federal Reserve suggested this week that it might have to rethink its economic forecasts if the trade wars continue.
.. The economy is booming, but Mr. Skarich said he was not reaping the benefits. Instead, as a result of Mr. Trump’s trade policies, Mr. Skarich said his nail company may soon be out of business.
.. Mid Continent, the largest American producer of nails, imports steel from Mexico to make its nails. That steel is now subject to the 25 percent tariffs that Mr. Trump imposed on dozens of countries, forcing Mid Continent to raise its prices by nearly 20 percent.
.. Orders have plummeted by 50 percent this month as the company tries to compete with cheaper foreign-made nails. Those foreign manufacturers are not facing higher steel costs, giving them an advantage over Mid Continent.
.. While Mr. Trump might propose that Mid Continent simply buy American-made steel, it might not be so simple: Mr. Skarich notes that the cost of American-made metal is much higher than what the company had been importing from Mexico, meaning it would still have to raise prices for its nails if it used domestic steel.
.. “He ran on ‘Make America Great Again,’ and the point was to defend and protect jobs in the United States,” Mr. Skarich said. “Now here is an action he decides to take that has the potential to cost 500 U.S. citizens their jobs.”.. China is expected to impose an additional 25 percent tariff on American lobster.. Trump’s policy was having the unintended effect of further helping Canada’s lobster market, which doesn’t face the same duties when selling to China... For several years, the cranberry industry has been struggling with an oversupply problem that has been eased somewhat by exporting juice and berries to Europe and elsewhere... Wisconsin is one of the world’s biggest cranberry producers and is the home state of Representative Paul D. Ryan.. exports to Europe were about $127 million last year.. European tariffs on peanut butter will be a blow for the makers of Peter Pan and Skippy spreads, but it is peanut farmers in Republican-leaning states like Georgia, Alabama, Florida and Mississippi who could struggle the most... The United States and China are the biggest peanut butter exporters in the world, according to the Department of Agriculture, and European tariffs would likely give China an edge in expanding its market share.
.. “If this can give him some leverage to get a deal made, they’d be all for that,” Mr. Broome said. “If it doesn’t work and he’s miscalculated, then it could be a different story.”