Walmart/Lowes statements on Tariffs: We're concerned

I understand why targeted tariffs might be used. For example, years ago, Chinese steel companies received state subsidies, and they dumped products at drastically reduced prices. This drove foreign competitors out of business and leaving steelworkers without a job. Once these Chinese companies were one of the few remaining suppliers, they raised prices.

However, setting up across-the-board tariffs on all imports would create numerous problems. Other countries would likely retaliate, targeting industries that would cause the greatest political backlash in the United States.

Imo Trump wants tariffs as he is concerned about the large trade imbalance and how it reflects on the image of the United States as the world’s most powerful country. Also he sees this as another route for federal income and thinks this will build up our industry base. This all seems accurate but a deeper dive is needed on impacts of across the board impacts.

 

And his increase in the deficit to fund the tax cuts will cause rates to go up, further dampening the economy

 

Wait, you mean tariffs are paid by us consumers? Lock him up

 

The US has been subsidizing our steel industry pretty much since its inception.

as for national security...

The mythical national security argument for protecting the steel industry - Breaking Defense

Historically, the Pentagon has bought significantly less than 1 percent of the US steel industry’s output, although the industry believes that number is closer to 3 percent. Even if you take industry’s number as gospel, that’s simply not a massive amount. The steel that is most important to DoD is of high quality and bought at low volumes, primarily from two plants in Pennsylvania that produce the armored plate for Navy ships and Army ground vehicles. These plants are currently owned by Cleveland-Cliffs, a company that, seeing no profitable options to invest in its plants or its workers, recently announced it will engage in high levels of stock buybacks. (The company did offer $7 billion for US Steel but was outbid by Nippon Steel’s $14 billion tender.)

There is no question that the plants that still produce defense-grade armor are critical to national security and have been the recipients of Defense Production Act (DPA) subsidies to ensure that they stay in business and support DoD. The rest of the steel industry, however, has not only been mostly worthless to national security — it has arguably become detrimental to it. This is due to the adoption of domestic source restrictions that torture DoD’s supply chain to buy de minimis levels of steel found in products such as casings, fasteners and spare parts, often at higher prices than it could buy from abroad. The cost to police DoD’s supply chain to comply with mandated domestic sourcing requirements is enormous for the minimal amount of metal and money involved in military products that are not ships or armored vehicles.

The national security argument made for forcing this on the Pentagon has always been that we would need the industry in place if we are ever in a conflict and had to build more ships and armored vehicles at scale. This same argument has also been made to keep in place tariffs and other protectionist measures that benefit the 97-99 percent of the US steel industry that does not directly support DoD.


It ain't just consumers paying the tax. Many US industries costs way up b/c steel is a critical input. Further, steel tariffs costs many jobs in the those other industries.

 

Damn, you mean President XI isn't getting out his checkbook and writing big fat checks to Uncle Sam? Shocking.

 

Unfortunately, that’s how the senile boomer we elected thinks it works…. You’d hope someone around him would explain this to him, but Unfortunately, Based on his cabinet appointments of “yes men” and incompetent buffoons, the elderly dotard future president might still be the smartest person in the room.

In September, he repeated the claim during an interview with Fox News: “It’s not a tax on the middle class. It’s a tax on another country.”

And he said again during a rally in Wisconsin Saturday that “it’s not going to be a cost to you, it’s going to be a cost to another country.”

 

Really interesting insights.
Regarding steel, my concern was industries like auto if they bought cheaper Chinese steel in an unfair mkt and it’s impact on US jobs.

Clinton faced backlash for being a key figure in opening up China’s trade with the U.S. and globally back in 2000.

China has a history of unfair practices, including extremely low labor costs (sometimes prison labor), currency manipulation, IP theft, trade barriers, and more. This is an uneven playing field, especially if we remain more open with trade. Some of our gov leaders are aware of these issues which makes them hawkish. Understandable when entire sectors of our society are losing jobs. But most economists agree broad tariffs, are a bad idea.

Ironically, decades ago, the debate between inflation and tariffs saw Democrats (with strong union support) favoring tariffs more than Republicans. Many leaders don’t fully comprehend all the complexities much less have great solutions. I sure don’t.

 

There’s already a mechanism in place for anti-dumping and countervailing duties that industries can petition for implementation. My company just went through this for aluminum extrusions.

 

Conjecture… Assuming Walmart is the importer, they can eat the cost or pass it off. They might eat the cost if Trump strong arms Congress to reduce the corporate tax rate to 15%. A 6% tax rate reduction might offset Walmart’s tariff impact. It might be a lot of smoke and mirrors.

 

Corporations are the last folks we need to listen to. They have pushed all manufacturing offshore chasing higher margins and profit. Problem is the countries like China are playing the long game, now forcing companies to start developing the products in their country etc. Basically forcing the knowledge and know how transfer.

Blanket tariffs are nieve. But we should do something to even the playing field.

 

Any info on expected outcome?

 

There's also a process for importers to get exemptions from the tariffs. Just read a research paper on the subject. Most applications get denied but there was a high correlation between those few that got exemptions and their level of campaign contributions during the last round of tariffs.

 

Just borrow from future generations

 

In our case we import aluminum from Korea which was one of the fourteen countries targeted for allegedly selling aluminum cheaper into the US than they sell it within their own countries. We just found out late last month that the government found there was no impact on domestic aluminum extruders so the anti dumping duties were denied to the US extruders.

Frankly it was BS. The domestic companies were trying to claim they lost a ton of business and their prices were depressed prices. It wasn’t remotely close to being true. We’ve tried to buy domestically and can’t because lead times are horrendous since they’re so busy and if we could buy it their quality is generally poor when we need high tolerances for what we do.

Bottom line is the US aluminum industry was hoping to use the government to allow them to charge even more. Fortunately they saw through it so it didn’t result in even higher prices for customers.

 

I would live to know who we need to donate to.

 

Have you heard of the term "dumping" when it comes to foreign products like steel? All countries subsidize their biggest industries, especially their steel industries, in one way or another.

It's amazing how many people do not understand that foreign governments know that the U.S. is a huge consumer of steel, and they will do anything to sell their steel to us, including selling it at prices so low that we cannot compete. And if we let them do that they will bankrupt our entire industry, then we will need foreign steel just to build our skyscrapers, railroads and infrastructure, the latter of which is in need of a complete overhaul.

Our ability to modernize and repair our nation and infrastructure should never be at the mercy of a foreign country's steel, nor should any other large construction products. That independence to produce our own domestic building materials is a national security issue.

No country should ever lose its ability to make steel and other products that are vital to their country in other ways. These products/commodities like steel are not just for the DoD and the military complex. Infrastructure materials should be made with domestic steel owned and operated by Americans. Yes, I would like more if not all of these industries own and opaerated by Americans too.

 

We willingly traded jobs for stock prices long ago. My old man used to say, if you don’t make shat, you ain’t shat.. .

Trying to get things back gets interesting. We lost manufacturing know how, facilities and quality control. I looked at a number of carbon fiber products this year, as stated above for aluminum, the issues were lead times and quality control. The reject rate for Korean vs US parts were quite different. Felt a bit like the 70-80’s auto industry.
Caveat would be that bigger buyers certainly get different treatment.

 

Those who are in favor of these tariffs are forgetting the fact that countries will retaliate with their own tariffs which will hurt American exporters. We had to bail out American corn and soybean farmers when China retaliated

 

Unfortunately you can’t put the genie back in the bottle at this point.

Across the board tariffs will cause inflation any way you cut it. Even if the end goal is to bring manufacturing home, you still have to deal with US labor costs.

Best thing you can do is work with these countries to produce better outcomes for both sides.