Tariffs on Mexico will hurt American business

President Donald Trump said the United States will impose a 5% tariff on all Mexican imports, effective June 10. Trump warned that the tariff will increase until "the illegal immigration problem is remedied."

Posted: May 31, 2019 7:20 PM
Updated: May 31, 2019 7:20 PM

Tariffs on Mexico will be bad for American business. Period. How do we know that? Because other tariffs are already hurting American companies.

Business in the 21st century is complicated. Protectionist trade policy can backfire. Just look at two sets of tariffs imposed earlier by President Donald Trump.

In January 2018, Trump imposed a 20% tariff on imported washing machines. Whirlpool was ecstatic. "This is, without any doubt, a positive catalyst for Whirlpool," CEO Marc Bitzer said at the time. The company added 200 jobs in its Ohio factory in anticipation of a sales surge.

Whirlpool bet wrong. Separate tariffs on steel and aluminum caused Whirlpool's production costs to soar. Americans scoffed at higher washing machine prices. People who didn't urgently need new washing machines stuck with their old ones or went to the laundromat. Whirlpool sales fell last year and the company reported its first annual loss in 17 years. The company's stock is down 37% since the tariffs were announced.

Then there are the steel tariffs announced in March 2018. They were designed to help US Steel and Nucor, which had been losing business to Chinese steel companies for decades. The 15% import tariff led the American steelmakers to ramp up production and add 9,000 jobs.

US Steel and Nucor started making more steel — way too much. Demand for steel didn't budge, so all that new metal flooded the market and sent prices plummeting 25%. The stock of US Steel has fallen 70% since the Trump administration announced the tariffs. Nucor, the largest steelmaker in the country, is down 25% over the same period.

The Trump administration may have intended the tariffs to protect American businesses, but in reality they're hurting them. The market is global, and manufacturing is cheaper overseas. America's economy has been predominantly made up of services for decades. Tariffs can't bring back the old days when America exclusively made stuff. In the 21st century, America's companies need to buy stuff from overseas.

That's why tariffs raise costs for American companies, which in turn hike prices for American consumers. That is taking a toll on businesses and the economy at a delicate time for both.

The US economy remains strong, but signs are it's in the late stages of what has been a very long growth cycle. Consumer spending is slowing down and the trade war isn't helping: Americans spent 2.5% less on imported goods in the first quarter. Corporate profits fell for the second straight quarter, the US Commerce Department announced Thursday. Businesses are investing less as a result.

Yet Trump recently raised tariffs to 25% on $250 billion of imported Chinese goods. And, on Thursday, he threatened tariffs of up to 25% on Mexican goods.

America's businesses are not pleased. The US Chamber of Commerce and Business Roundtable — which represent businesses that employ a vast number of people — are ringing alarms.

A year and a half's worth of evidence shows tariffs are hurting, not helping, their intended targets.

Huntsville
Scattered Clouds
70° wxIcon
Hi: 73° Lo: 67°
Feels Like: 70°
Florence
Overcast
72° wxIcon
Hi: 86° Lo: 70°
Feels Like: 72°
Fayetteville
Clear
70° wxIcon
Hi: 81° Lo: 68°
Feels Like: 70°
Decatur
Clear
71° wxIcon
Hi: 76° Lo: 68°
Feels Like: 71°
Scottsboro
Scattered Clouds
72° wxIcon
Hi: 80° Lo: 67°
Feels Like: 72°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Confirmed Cases: 49892

Reported Deaths: 1077
CountyConfirmedDeaths
Jefferson6433170
Mobile4753139
Montgomery4430112
Tuscaloosa263253
Madison21199
Marshall192611
Shelby164225
Lee157237
Morgan12695
Baldwin120711
Walker106131
Elmore102920
Dallas9969
Etowah95114
DeKalb9417
Franklin93216
Autauga67614
Russell6750
Chambers67427
Unassigned65328
Butler65129
Tallapoosa62869
Limestone6223
Houston5857
Cullman5716
Lauderdale5686
St. Clair5133
Colbert4956
Calhoun4905
Lowndes48122
Escambia4808
Pike4725
Coffee4244
Jackson4182
Covington41412
Barbour3942
Dale3911
Talladega3897
Bullock37710
Marengo35211
Hale34823
Chilton3232
Clarke3126
Wilcox3038
Blount2961
Winston2965
Sumter29113
Marion27514
Pickens2696
Randolph2589
Monroe2553
Perry2362
Conecuh2308
Bibb2211
Macon2159
Choctaw21212
Greene1959
Henry1533
Washington1418
Crenshaw1273
Lawrence1250
Cherokee1237
Geneva960
Lamar871
Clay852
Fayette821
Coosa651
Cleburne421
Out of AL00

Tennessee Coronavirus Cases

Confirmed Cases: 61006

Reported Deaths: 738
CountyConfirmedDeaths
Shelby13423223
Davidson13162143
Rutherford352539
Hamilton330538
Sumner189756
Williamson170816
Knox15919
Trousdale15085
Out of TN138410
Wilson114817
Putnam10117
Bradley9594
Robertson92413
Sevier9153
Unassigned9102
Montgomery7327
Lake6970
Tipton6967
Bledsoe6291
Bedford6239
Macon5977
Hamblen4724
Maury4543
Hardeman4114
Fayette3685
Madison3522
Blount3403
Loudon3322
Rhea3150
Dyer2913
McMinn27619
Cheatham2693
Washington2610
Dickson2580
Lawrence2326
Cumberland2134
Sullivan2104
Anderson1952
Jefferson1821
Lauderdale1804
Gibson1771
Monroe1556
Greene1512
Smith1502
Coffee1410
Cocke1360
Hardin1257
Warren1230
Obion1192
Haywood1183
Franklin1163
Marshall1152
Wayne1150
Carter1031
Giles1031
Hickman1030
McNairy1011
Marion944
Hawkins862
Lincoln860
DeKalb850
White853
Roane810
Overton721
Henderson710
Weakley701
Campbell691
Claiborne680
Grundy652
Chester630
Unicoi590
Grainger560
Polk550
Carroll521
Crockett523
Henry510
Cannon490
Sequatchie490
Jackson470
Johnson460
Humphreys392
Meigs380
Perry370
Morgan311
Decatur270
Fentress260
Scott260
Stewart260
Union250
Moore210
Clay200
Houston200
Benton151
Hancock110
Lewis110
Van Buren90
Pickett70

 

 

Community Events