Business
Businesses Blame Import Tariffs For Inflation
With the rise in inflation rates, economists are looking at another likely suspect: import tariffs. There is a growing belief that apart from the usual suspects of stimulus spending and easy monetary policy, import levies are playing a part.
RELATED: A Court Knocks Donald Trump Tariffs
Housing Material Tariffs
In an effort to shield American companies from an excess of cheap imported products, former President Donald Trump implemented import tariffs on products such as lumber, steel, and Semiconductors.
Even then, US businesses that import the materials oppose the levies. These businesses are now making a push at President Joe Biden’s administration to remove the import tariffs.
They believe that tariffs helped push higher prices and contribute to product shortages. These two factors are now hampering the US’s post-pandemic recovery efforts.
No Justification For Import Tariffs Right Now
Scott Buehrer is president of B. Walter, a fabricated metal products manufacturer. He said beginning September, he absorbed at least 15 price increases from his steel supplier.
“What’s the justification for these tariffs when you have sky-high steel prices?” he said. B. Walter is among the 300 manufacturers that wrote to Biden earlier this month asking to remove the 25% tariff on steel and 10% on aluminum.
However, some economists removing tariffs won’t help in easing price pressure on materials. At the most, tariffs can only produce muted effects on prices.
The White House said it is reviewing the policy but gave no indication if and when they will lift the levies. The manufacturers insist that import duties make them less competitive at a time when there is a great demand in the US market.
As a result, US buyers pay up to 40% more for steel products compared to their European counterparts.
Buehrer said he cut his payroll by 10% to reduce costs as prices of rolled steel nearly tripled. However, labor unions and the steel sector urged Biden to keep the metal tariffs in place.
In a May 19 letter that the policy allowed the industry to reopen idle mills and rehire workers. “The tariffs have been in place since 2018 and there has been no inflationary pressure since then.
The U.S. has put trillions of dollars of stimulus into the economy. That is going to impart some inflationary pressure,” said Roy Houseman, legislative director at United Steelworkers.
Home Building Industry Affected By Tariffs As Well
Meanwhile, the home-building industry is also dealing with soaring prices. Futures contracts of lumber in May reached more than $1,600 per thousand board feet.
This is four times the typical price of lumber at this time of the year. In fact, the National Association of Home Builders estimates the higher lumber prices added $36,000 to the price of a typical single-family home.
Robert Dietz, chief economist of the National Association of Home Builders. “It doesn’t make any economic sense to be taxing things when you don’t have sufficient domestic supply,” said “Appliances, washing machines, literally the nuts and bolts that go into making a home—screws, and nails—are subject to some of the metal tariffs.”
Canadian Lumber
In addition to steel and aluminum tariffs, the industry wants Biden to eliminate tariffs imposed in 2017 on Canadian softwood lumber.
The tariffs are part of a long-running dispute between US and Canadian lumber producers. Instead of removing the duty, the Commerce Department issued a preliminary decision on May 21 to double the levy to 18%.
The department concluded that Canadian imports remain heavily subsidized. The tariffs will remain at the current 9% until a final decision on the proposed increase is made by November, a Commerce Department official said.
Watch the Metal Roofing earning Channel’s report on steel price forecast and steel supply 2021 Q3 Update: Metal Pricing And Steel Shortage:
Loading ...Do you agree that import tariffs are part of the reason for inflation right now? Will removing the tariffs reduce prices?
Let us know what you think about the US import tariff issues and how it affects inflation. Share your comments in the comment section below.
10 Comments
It’s more important than anything. There’s no way out of it.
I think the tariffs or a good thing it keeps China from dumping cheap steel into this country.
CHINA HAS BEEN RAPING THE UNITED STATES FOR DECADES IN ORDER TO ALLOW OUR CORRUPT CONGRESSMEN TO LINE THEIR OWN POCKETS! WE NOW HAVE THE ANTIPATHY OF GOVERNANCE IN THE WHITE HOUSE! A PRESIDENT,? COME ON MAN! JOE HAS SHUT DOWN THE KEYSTONE PIPE LINE, STOPPED DRILLING ON PUBLIC LANDS AND ALLOWED A RUSSIAN CONCERN TO SUPPLY EUROPE, SPECIFICALLY, GERMANY AND UNDERMINE NATURAL GAS INTERESTS OF THE U.S. WE CAN’T ALL OWN STOCK IN BURISMA! BIDEN IS THE MOST CORRUPT PRESIDENT IN US HISTORY! DON’T WORRY IT’S NOT A SUBJECT TAUGHT IN PUBLIC SCHOOLS ANYMORE! TRUMP PUT TARIFFS ON CHINESE IMPORTS AS THEY HAVE DONE WITH OURS, WITH NO PUSH BACK, FOR DECADES! PAY ENOUGH POLITICIANS AND YOU CAN OWN AMERICA, AS DOES CHINA TODAY! I DON’T CARE ABOUT POLITICAL AFFILIATIONS, I JUST CARE ABOUT WHAT’S GOOD FOR THE COUNTRY, AND $6.00 GAS AINT IT! DEPENDENCE ON FOREIGN OIL IS A VAST STEP TOWARD COLLECTIVE BARGAINING, IN THE VERNACULAR, COMMUNISM! IF YOU ALREADY FEATHERED YOUR NEST LIKE ALL THE BIDEN’S, WHO CARES ABOUT THE PREPONDERANCE OF THE AMERICAN PEOPLE. JO IS THE WRONG PERSON AT THE WRONG TIME! AS IF THERE COULD EVER BE A RIGHT TIME FOR A STUPID, SELFISH,GERIATRIC, SON OF A BITCH LIKE JOSEPH BIDEN!
Quit supporting COMMUNIST China. Period.
It is clear to anyone that is not a screaming, ranting ignoramus that tariffs are having an effect on our economy. The company I work for has had to raise prices 3 times since the previous administration started the tariff wars. Tariffs are a tax on the consumer collected by the government, and they are a cause of inflation. I am in favor of some method of stimulating the purchase of American made products to promote growth in the industries such as steel, aluminum, and wood instead of tariffs. Perhaps government contracts requiring all suppliers to purchase from American manufacturers. Even government purchased office supplies!
Amen.
The industry participants who are complaining about tariffs are squealing because they cannot exploit cheap labor and resources elsewhere.
American production, using American labor, is the farthest concern from their minds; only how much profit can be yielded without risk of imprisonment.
You do not hear the suggestion that this price differential creates a need for start-up domestic production of needed resources, for domestic consumption.
This is their own Country they place last! I bet their mothers’ teeth would not make it to their graves, if they were gold.
So we tax now, but thats not a new concept Tariffs are the way of life like the IRS. CHINA and any other importer into the USA should be charged at the gate. You have to pay to play in the biggest consumer MKT in the world and its about time the higher cost should be absorbed by the Chinese government who has profited over decades of low to no Tariffs. What america should do is to halt imports in certain manufacturing areas in Chinas wheel house to send a message that we to can provide these goods to ourselves. AS for steal is it really “certified”
The Fraudulent Reserve, aka The Fed, which is no more Federal than Federal Express and is, in fact, a For Profit Corporation of international banksters are printing Federal Reserve Notes 24/7, running up our national debt, that they collect interest on.
That, my friends has been the financing of social programs and a bloated bureaucracy since 1913 and is the primary driver of inflation and depression cycles.
Get rid of the Fed. Return the monetary system to the U.S. Treasury and balance the budget, by reducing the mammoth deep state bureaucracy, to a government reduced to perform only it’s enumerated powers and our nation will prosper, again!
Get rid of the political party system would fix everything and crooks like Donald Q Trump could never get a vote because only reason he got elected is because of die hard republicans that would vote for Hitler if he ran on the pub Ticket. Trump says he is going to be reinstated in August this year. Another Lie. He has told more lies than all politicians combined since beginning of politics but it doesn’t matter as long as he runs on republican ticket.