CHARLOTTE – Think what you will of the negotiating style of President Donald Trump with respect to trade deals – either a ballsy stroke of genius, or a dangerous game of chicken – in terms of economic liberty, protectionism and the accompanying import taxes and shielding of select industries from competition, necessarily burdening the others, is antithetical to a free market system that empowers producers and consumers.
The administration’s new tariffs on goods from China, Canada, and the EU, and the respective retaliations from those entities, have real economic impacts irrespective of whether or not the negotiating tactic is successful. Those impacts can already be felt in North Carolina and the trade war is just beginning to heat up.
Negative impacts befall farmers, brewers, and builders, while steel and lumber producers come out on top.
“Drew Medlin sees the impact of the trade war in the falling prices for his Union County soybeans.
Glenn Sherrill sees it in the skyrocketing prices for the steel that’s building Charlotte’s skyline.
And Todd Ford sees it in the rising cost of aluminum cans at his Charlotte brewery.
They are part of the collateral damage already being felt around the Charlotte region from President Donald Trump’s burgeoning trade war.
That fight escalated this month with tariffs on $34 billion worth of Chinese-made goods while China enacted tariffs of its own. Earlier, Canada and the European Union retaliated against Trump’s tariffs on steel, aluminum, motor vehicles and hundreds of other items. More tariffs are in the pipeline.
The U.S. Chamber of Commerce says $1.1 billion in North Carolina exports are threatened by a trade war, including a half-billion dollars worth of exports to Canada and $350 million to China.
Tariffs are impacting not only businesses, builders and growers but consumers who will see higher prices for things like appliances, cars and houses. Multimillion-dollar projects are in danger of being postponed or canceled.
In Union County, Medlin, 34, is dealing with the impact on the 3,500-acre farm he runs with his father.
“It’s a dark cloud, and it doesn’t go away,” said Medlin. He said he’s seen soybean prices fall about $2 per bushel in recent months over concerns about potential tariffs from China, a major importer of U.S. soybeans.
“I’m hoping that we can at least make it the next couple of years and try to weather the storm, and maybe something positive will come out of it,” he said. “That’s all you can hope for.”
Nucor, a Charlotte-based steel manufacturer, is benefiting from higher prices for U.S. steel in the wake of 25 percent tariffs on steel imports.
“Nucor supports the government’s efforts to stop the flood of illegally subsidized and dumped steel imports into the U.S.,” CEO John Ferriola said in a statement. “Tariffs send a strong message that dumping artificially cheap steel products into our market will no longer be tolerated.”
Mark Vitner, senior economist for Wells Fargo Securities in Charlotte, said steel producers like Nucor will benefit as prices rise and they are able to win back market share lost to overseas producers.
“The timber and lumber industries are also benefiting and we have seen increased investment in lumber yards throughout the Carolinas,” he said. “Of course higher prices for steel and lumber mean that it is more expensive to purchase things made with them.””
There is no doubt that countries around the world arrange byzantine trade deals full of protectionist measures that hurt U.S. companies and consumers. The EU has employed tariffs and onerous regulations on imports for decades, while China is infamous for its firm control of its domestic market, tariffs, blackmail, and outright theft.
The ideal outcome of threats of tariffs from the world’ largest economy would be the EU and China and others having an epiphany under duress that leads to a tearing down of the world’s screwy trade arrangements and mutually eliminating all protectionist measures.
However, when you fight fire with fire, it should come as no surprise that plenty gets burned in the process. What right does the government have to protect some, and burden others? To dictate where you do your business, or how you manage costs?
The principles of freedom hold that such mercantilism has no place in the United States, but the reality is that those principles often get disregarded in emotional pleas to hit back at those that take advantage of us.
Let’s hope it works out for the best, while acknowledging that such policies are an abuse of government power employing an ‘The ends justify the means’ mentality that discounts individual rights and economic liberty.
Read more about effects of the tariffs in the Old North State right here.