Late last week the Trump Administration announced tariffs on imports of steel and aluminum from Canada, Europe and Mexico some analysts fear will ignite a trade war that damages economies and kills jobs in affected countries and the U.S. – a stark forecast that, if realized, could hurt collective sales in the promotional products industry. Tariff proponents, including President Donald Trump, believe the measures are a step toward leveling the playing field for the U.S. when it comes to international trade, adding that the 25% import tariff on steel and 10% tariff on aluminum will strengthen the American economy.
The United States must, at long last, be treated fairly on Trade. If we charge a country ZERO to sell their goods, and they charge us 25, 50 or even 100 percent to sell ours, it is UNFAIR and can no longer be tolerated. That is not Free or Fair Trade, it is Stupid Trade!— Donald J. Trump (@realDonaldTrump) June 2, 2018
Canada, Europe, and Mexico weren’t about to take the U.S. tariffs lying down. Canada announced retaliatory measures, saying it would place tariffs on $16.6 billion in U.S. imports, including everything from steel and aluminum to mayonnaise.
American tariffs on Canadian aluminum & steel are unacceptable. As we have said, we will always stand up for our workers, and today we’re announcing retaliatory measures to this attack on our industry.— Justin Trudeau (@JustinTrudeau) May 31, 2018
Meanwhile, unionized American steelworkers, who are among those the Trump Administration’s tariffs are intended to benefit, called on the U.S. president to exempt Canada from the tariffs.
The United Steelworkers Union is calling on the Trump admin to exempt Canada from steel and aluminum tariffs, saying that the tariffs are "wrongheaded" because they would hurt the industry in both countries. https://t.co/llr5bG1R3Y— Kyle Griffin (@kylegriffin1) June 3, 2018
In Mexico, government officials criticized the U.S. tariffs, saying they’re not justified, while pledging to retaliate with tariffs on American lamps, pork, fruit, cheese, flat steel and more.
Trump’s Steel Tariffs Incite Retaliation From Mexico And Canada— Jon Cooper 🌊 (@joncoopertweets) June 1, 2018
Mexico announced it would be imposing its own tariffs, with support from Canada’s Prime Minister Justin Trudeau. https://t.co/fH8yryjfwF
Overseas, European Union officials were outraged by the imposition of the tariffs. Cecilia Malmström, the EU’s top trade commissioner, called the tariffs “illegal.” She said the EU would make a case in support of that position to the World Trade Organization.
Prime Minister Theresa May's spokesman says she has told U.S. President Donald Trump the tariffs imposed on steel and aluminium imports were "unjustified" and she is "deeply disappointed" at the decision— Sky News Breaking (@SkyNewsBreak) June 4, 2018
It wasn’t clear Monday if the EU planned to move forward with retaliatory tariffs. However, European officials have previously mentioned potential tariffs on American products that include everything from Harley-Davidson and Levi’s jeans to Kentucky bourbon.
‘The EU must respond to Trump’s trade offensive’— Molly Scott Cato MEP (@MollyMEP) June 3, 2018
Spot on from @financialtimes
Bullies do not respond to appeasement, as I argued in my speech during the European Parliaments debate ontne #steeltariffs last weekhttps://t.co/bVog8BuekA
Back in the U.S., some members of Trump’s Republican Party are not in favor of the tariffs because of the potential repercussions.
Bad news that @POTUS has decided to impose taxes on American consumers buying steel and aluminum from our closest allies--Canada, the EU, and Mexico (with whom we run a trade surplus on steel). In addition to higher prices, these tariffs invite retaliation.— Senator Pat Toomey (@SenToomey) May 31, 2018
A list of some of the Americans who don't think Trump's tariffs on Canada are a good plan https://t.co/5KEj8mlHdx— Maclean's Magazine (@macleans) June 4, 2018
Some analysts think Trump’s tariffs could backfire on the U.S. They argue the tariffs will drive up the cost of steel and aluminum domestically, hurting the bottom lines of industries that rely on those products, including the construction, oil and utility sectors, as well as food and drink providers that need the materials for cans. Critics also note that retaliatory tariffs could be detrimental to the international sales of American companies who sell affected products.
Should they come to pass, such scenarios could potentially harm the promotional products industry. U.S. end-clients in tariff-impacted industries could start clipping their promo budgets as part of cost-cutting, leading to reduced sales for promo distributors and suppliers. These customers could also lay off workers, meaning fewer employees to equip with uniforms and/or company-branded apparel and hard goods. Several promo suppliers that provide products like stainless-steel tumblers told Counselor it initially appears such items will not be affected by the tariffs, but admitted they are still reviewing the potential implications.
The Trump Administration is looking at a possible trade war on multiple fronts given recent tariff decisions on Chinese goods. If a full-fledged trade battle breaks out with China in particular, the promotional products industry would likely be in the middle of it. Tariffs on imported Chinese goods have the potential to raise the price of promo items sold in North America, as the vast majority of products available here continue to be produced abroad, particularly in China.