Markets, businesses, nations impacted by U.S. tariffs
Update: March 10
Toro CEO Rick Olson made this statement in the company’s recent financial filing, “We recognize the heightened level of uncertainty affecting the macro environment, including a decline in consumer confidence and rapidly evolving trade policy. We are prepared to take operational and pricing actions, as appropriate, to position the company for success. As a reminder, our products perform necessary work and the vast majority are produced in the U.S.”
In its weekly email newsletter, the OPEI shared a link to a feature story on the Supply Chain Brain website, which questioned the potential for a rise in American manufacturing following these tariffs.
Beginning just past midnight on March 4, the Trump administration initiated 25% tariffs, which many business reporters and economists also refer to as taxes, on imports from Canada and Mexico, with Canadian energy products now subject to 10% import duties. The 10% tariff that Trump placed on Chinese imports in February was doubled to 20%.
As Goldman Sachs analysts note, the average tariff rate on imports from China is now 34%, roughly twice as large as in Trump’s first term.
At the end of the prior trading day, stock markets in America began dropping, with the Dow Jones, S&P 500 and NASDAQ exchanges all closing down more than 1%. On Tuesday, March 4, the Dow Jones lost nearly 700 points.
Beijing retaliated Tuesday with tariffs of up to 15% on a wide array of U.S. farm exports. Canada said it would hit America with tariffs on more than $100 billion of American goods over the course of 21 days.
Mexico President Claudia Sheinbaum responded by announcing Tuesday that Mexico will impose its own retaliatory tariffs on U.S. goods, and Sheinbaum will announce those moves on Sunday in a public event in Mexico City’s central plaza. “There is no motive or reason, nor justification that supports this decision that will affect our people and our nations,” she said.
The Wall Street Journal Editorial Board, on March 3, wrote, “We’ve courted Mr. Trump’s ire by calling the Mexico and Canada levies the “dumbest” in history, and we may have understated the point. Mr. Trump is whacking friends, not adversaries. His taxes will hit every cross-border transaction, and the North American vehicle market is so interconnected that some cars cross a border as many as eight times as they’re assembled.”
Editor’s note: We are reaching out to several manufacturers in the outdoor power equipment industry for comments on tariffs, and will update as responses arrive.
Steel tariffs and manufacturing
On Feb. 11, President Trump reinstated the full 25% tariff on steel imports and increasing tariffs on aluminum imports to 25%. He announced that “key reforms include eliminating all alternative agreements, applying strict ‘melted and poured’ standards, expanding tariffs to include key downstream products, terminating all general approved exclusions, and cracking down on tariff misclassification and duty evasion schemes.”
The tariffs would likely boost steel prices, according to the Council on Foreign Relations, benefiting U.S. producers and potentially adding to the industry’s 140,000 jobs. Indeed, when Trump first imposed tariffs on steel and aluminum in 2018, prices for both metals rose some 2 percent, and imports fell by about a quarter.
Research estimates that Trump’s 2018 tariffs led to the direct loss of seventy-five thousand manufacturing jobs, with additional losses from retaliatory tariffs imposed by other countries, often on non-steel products.
Higher steel and aluminum costs hit construction, auto, packaging, appliances, machinery, oil and gas, and electrical industries the hardest. Building a car takes about half a ton of steel, so a 25 percent tariff could add over $1,000 in production costs per vehicle. Manufacturers could then pass those costs onto consumers. Indeed, in 2018, U.S.-based Caterpillar—the world’s largest manufacturer of construction equipment—bumped up prices to make up for more than $100 million in extra costs, blaming Trump’s metal tariffs. The Peterson Institute for International Economics estimates that, in the end, Trump’s steel tariffs cost taxpayers more than $900,000 each year for every job they saved or created.
Discussing tariffs in November, Stanley Black & Decker CEO Donald Allan Jr. said, “When I look at our industry, if I took our Chinese operation that we have today that makes power tools and brought it over in the US, the cost to make that product would be about 60% to 70% higher. So it’s substantial, which the consumer will not pay for. And so if we’re going to reduce our China exposure, which we are, we’ll be looking at other southeast Asian countries like Vietnam or maybe Mexico, where we certainly have a significant operation already.”
“We’ve been planning different scenarios since Spring,” Allan told Yahoo Finance. He said he has spent time with elected officials to make them understand the full impact of tariffs.
