Trump Administration Moves Forward with Tariffs, U.S. Trade Partners Plan Response

Last week, Secretary of Commerce Wilbur Ross announced that tariffs on imported steel and aluminum would go into effect at midnight. These tariffs took effect on other countries, including Russia and China, in March; however, several countries received exemptions while the Trump Administration negotiated on other trade issues. Brazil, Argentina, and Australia all agreed to limit steel exports to the U.S. to avoid the tariffs. Tariffs of 25 percent on steel, and 10 percent on aluminum, will be assessed on imports from Canada, Mexico, and the European Union.

U.S. trading partners are likely to respond to these newly imposed trade barriers by increasing tariffs on American exports. For example, the European Union has previously threatened to increase taxes on U.S.- made products, including motorcycles, orange juice, Levi’s jeans, and bourbon. Mexico’s Economic Ministry has announced that it would move to increase tariffs on U.S. pork, flat steel, apples, cheese and other products. International trade plays a major role in the U.S. economy – the World Bank estimates that imports and exports of goods and services accounted for 27 percent of U.S. gross domestic product in 2016.

As a result, the tariffs will increase the costs of American goods, which will impact export volumes, while also increasing costs for American manufacturers that use steel and aluminum. The U.S.-based Aluminum Association announced that it was disappointed by the announcement, and that the new tariffs do little to address the challenge of structural aluminum overcapacity in China “while potentially alienating allies and disrupting supply chains that more than 97 percent of U.S. aluminum jobs rely upon.”

Third-party logistics companies play a critical role in increasingly digital global supply chains. TIA strongly supports the removal of barriers to the flow of goods in international and interstate commerce. Issues such as the tariffs on steel and aluminum, and the renegotiation of trade pacts like the North American Free Trade Agreement, will have a major impact on 3PLs and their customers.

TIA will continue to closely monitor these issues. For more information, or to join with TIA members that are concerned about international trade and freight issues, please contact Will Sehestedt at sehestedt@tianet.org.