What’s behind the recent steel tariffs?

The Trump administration recently announced a 25% tariff on steel and a 10% tariff on aluminum imports. It is still too soon to know what, if any, impact those tariffs will have on the trucking industry.

However, Robert Garcia, vice president of new business development, supply management at Corcentric, thinks we need to look at the tariffs from a broader perspective.

“For the last decade, the global economy has been highly subsidized by the governments of various countries in reaction to financial and industry crises,” he says. The question, according to Garcia, is how do we move away from highly subsidized economies to what has historically been — especially in the U.S. and Europe — free market economies?

He believes tariffs are part of the administration’s plan to protect the supply side of the economic equation so that the U.S. does not lose its competitiveness as other countries continue to subsidize their economies. “In theory, tariffs will level the playing field for companies that are in a free market environment when they compete with companies that continue to operate in a government-supported environment,” Garcia explains.

“I advise trucking industry-related businesses to take a long-term view of these tariffs. I believe this is just the opening salvo in additional tariffs that will be added across all industries to ensure competitive enforcing boundaries exist between free markets and highly subsidized markets,” he says.

In the short-term, Garcia says markets may be impacted by these tariffs and there could well be price increases. “But we need to protect our supply side in the long term or we will lose our competiveness, funding for innovation, and risk being exposed to limited supply for key products, etc.”

There is a lot of rhetoric going back-and-forth about counter measures against the U.S., but it is difficult to determine at this point how much of this is meaningful and realistic and how much is simply posturing.

If we have learned any lesson from history, it is that when rules, regulations and tariffs are put in place, companies still find ways to get their products into the markets they want to serve. Garcia explains that they find “another way,” often initially shipping their goods to countries with more favorable relations. “In essence, the market will continue to be served and I don't believe there will be any shortage of the steel and aluminum we need to build trucks or replacement parts,” he says.

TAGS: News Economics
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