Companies Ponder Moving To Mexico To Escape Trump Tariffs

Agritek: Larry Kooiker president of Agritek, a factory that makes a range of metal parts, says the tariffs on components have been poorly conceived. Kooiker also voted for Trump, and shares the sense that China’s trading actions require an aggressive response. “It’s just been a disaster,” he said, as clattering machinery pounded sheets of steel into brackets that hold shelves.

“Trump is killing us,” Mr. Kooiker said. “His bang for the buck is horrible.”

The steel tariffs were supposed to give American steel makers protection in the face of unfair competition from China. But Mr. Kooiker accuses American steel makers of profiteering at his expense, using the tariffs as an opportunity to raise prices by 25 percent.

Holland, Michigan

Those three companies are in the Holland, Michigan area. But there is nothing special about Holland. These same scenarios are underway countless times across the country.

Price Impact

The New York Fed investigates the Impact of Import Tariffs on U.S. Domestic Prices.

The authors concluded "In sum, our analysis suggests that that producer and consumer prices are about a third of a percent higher in 2018 as a result of higher import tariffs."

That analysis was based on the tariffs so far. It Trump triples tariffs, figure a full percentage point higher, or more. That could put the Fed in a bind.

Small Price Theory

Some suggest these tariffs are a "small price to pay" for benefits down the road.

But there won't be net benefits down the road. The steel industry benefited, for now, but at huge expense to manufacturers who use steel as an input.

Also, who gets to judge whether the "price" is small or large. It's easy for the average consumer to say they would pay an extra 10% to "save jobs". For starters, it won't save any jobs. But even if it did save jobs in the future, what if it was your business on the line today? Would that still be a "small price to pay"?

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Gary Anderson 1 year ago Contributor's comment

Nothing warms my heart more than Trump supporters having their hearts and companies ripped apart by the great con artist himself.