Although Donald Trump insisted this week that he isn’t “backing down” from his proposed import tariffs on steel and aluminum, news reports have indicated that a formal announcement is unlikely this week, as various legislators and trade groups seek to negotiate with the White House over possible exemptions or a completely different, more targeted approach to tariffs.
In a report from ABC, Speaker of the House Paul Ryan said the economy is doing “very well,” and while he wants to ensure “abuses are held to account, especially China,” he also wants to be sure “that every step we take forward does not have unintended consequences.”
In a speech on the Senate floor Monday, Senator Lamar Alexander (R-Tenn.) cited President George W. Bush’s 2002 effort to impose similar tariffs as an example Trump should seriously consider, as Bush’s tariffs were retracted within a year after causing the same consequences Ryan warned about.
“It's a good goal by a well-intentioned president, but I'm afraid that it will backfire just like it did for President Bush,” Alexander said. “Tariffs are big taxes; they are big taxes that raise consumer prices.”
The construction industry in particular will be significantly affected by the tariffs, and developers and contractors are reportedly bracing for potential increases in building material costs that will squeeze their profit margin and even kill some projects.
“Already, prices have jumped for lumber, steel and aluminum,” Ken Simonson, chief economist of the Associated General Contractors of America, said in a statement. “Potential double-digit tariffs or import restrictions on steel and aluminum could wreck the budgets for numerous infrastructure projects and private nonresidential investments. In addition, any countermeasures taken by US trading partners that are affected by these measures would harm US exporters, transportation and logistics businesses, and ports, which would reduce demand for a variety of construction categories.”
Major US trade allies are also in an uproar over the proposed tariffs, with Australian news reporting that Trump “emphatically” promised Australian Prime Minister Malcolm Turnbull last July that the country would be exempt from any tariffs resulting from the Section 232 investigation. In 2017, the US imported over 275,000 mt of steel from Australia, primarily cold rolled coil.
White House officials have repeatedly stated that country-specific exemptions are unlikely.
Goldman Sachs has also weighed in on the impact of import tariffs, stating that they "make the US less competitive by raising the prices of raw materials. While upstream producers gain, they are small relative to the downstream industries."
Aside from trade groups, allies, and major financial entities, one of the strongest oppositions for the tariffs has come from one of the industries the tariffs are allegedly supposed to protect: US defense. The whole point of a Section 232 investigation is to determine whether imports harm national security, and while the US Department of Commerce agreed when it released its remedy options, the Department of Defense does not.
In an interview on CNBC, the head of one of the largest industry associations weighed in. “This is going to impact companies big and small in the aerospace and defense world [and] more importantly we’re worried about retaliation,” said Eric Fanning, chief executive of the Aerospace Industries Association, which represents more than 300 aerospace and defense manufacturers and suppliers.
“Economic security is an important part of national security,” Fanning said. “We can see how the markets are reacting, we can see how our allies are reacting, so I’m concerned about some negative impacts that this might have on national security.”
The National Defense Industrial Association (NDIA) said the tariffs will harm the military industrial base as well as US service members if they are applied too broadly. “NDIA is concerned that any non-targeted increase in tariffs and resulting international retaliation will harm our defense industrial base and our warfighters, who depend on US industry and its global defense supply chain of allies and partners to ensure they have the best equipment at an affordable cost,” an NDIA spokeswoman said in a statement.