New U.S. Import Tariffs – What It Means for Small Businesses
In the aftermath of the 2016 presidential elections, President Donald Trump promised a protectionist and “America First” trade policy that includes the raising of tariffs. Most recently, a 25% tariff on steel and 10% tariff on aluminum is aimed at helping domestic metal compete against foreign producers but threatens to raise input prices on American business that use steel: namely small businesses.
Threats that face American industry include waivers on major American importers of steel from Mexico and Canada, retaliatory trade policies from nonexempt nations, and disruptions to cost practices at most small businesses. Industries such as manufacturing and construction may see increased prices to small businesses who use their services or equipment to stay afloat. However, seeing that small businesses rarely produce product domestically but instead shift manufacturing overseas, the impacts of the steel and aluminum tariffs are still unseen.
Furthermore, economies like that of the EU have already taken retaliatory measures. The European Union announced symbolic tariffs on iconic American products on Harley-Davidson motorcycles, Levi’s blue jeans, and American bourbon. However, another approach for foreign nations is to simply seek waivers on the tariffs. On March 13, 2018, Australian Prime Minister Malcolm Turnbull announced that Australia would not be subject to the steel and aluminum tariffs after a brief meeting with President Trump.
Complicated macroeconomic complications of the tariffs, assuming widespread and effectively enforced implementation, will help domestic steel and aluminum producers at the expense of small businesses. In states such as Missouri where steel accounts for 7.9% of total imports, small businesses will suffer. In a globalizing world, America’s protectionist tariff policies on basic inputs like steel and aluminum will ultimately become a hindrance to American small businesses.