Today, President Donald Trump made the dangerous and misguided decision to raise tariffs on steel and aluminum. This action will inevitably increase consumer costs in many industries, including passenger vehicles and major home appliances. The new tariffs are set to rise from 25% to 50% in just a few days’ time. If finalized, this move will bring the highest amounts of such tariffs since the mid-1930s. This regulatory decision has sent ripples of apprehension through industries regarding its far-reaching impacts on widely used products from cars to canned goods.
Steel is integral to the performance of many other products. According to the American Iron and Steel Institute, steel constitutes at least 60% of a car’s weight. The institute mentioned this figure in their Automotive Roadmap that can be downloaded from https://www.advanced.brown.edu/publications/2020-AISI-Automotive-Roadmap.pdf. Steel is the most important material by weight for vehicles. As a result, the new tariffs are likely to raise automakers’ manufacturing costs by billions of dollars.
Impacts on Automotive Industry
Consumer experts have cautioned that steep increases in tariffs could triple the price of a new car. The media is saying $2,000-$4,000—$4,000 is the high end of what’s possible. This increase isn’t happening in a vacuum, either, as consumers are facing skyrocketing prices everywhere from groceries to gas to rent.
Handley, an industry analyst, noted, > “All those things will be even more expensive to produce if the steel and aluminum inputs are more costly, which they absolutely will be.” This announcement further highlights the remarkable urgency of the moment for our manufacturers who are deeply dependent on these critical materials.
Additionally, the automotive sector isn’t the only industry hurting from the negative effects of the tariffs. It’s hard to overstate that the increased steel prices are causing significant inflationary pressures. It would set off a domino effect, raising costs in nearly every industry.
Broader Economic Ramifications
The beverage industry has already experienced the impact of tariffs. An earlier 25% aluminum tariff cost U.S. beverage manufacturers nearly $1.7 billion from 2018 to 2022 according to an industry analysis. Under the new tariff regime, prices for many canned goods are expected to increase too. Fans of Campbell’s soup and Coca-Cola soda will be greeted by $0.01 added to the price tag, predict analysts. This big jump would be the result of the new tariffs.
Hauk from The Beer Institute commented on this impact, stating, “It isn’t a huge amount on its own but if you think about the number of sodas or beers people have out of aluminum cans in a given year, it adds up over time.” This example highlights how what might appear to be modest price hikes add up to real money for consumers.
As home economics get harder with perpetual inflation on essential goods, the harms of these tariffs are not just monetary at their advent. That the entire economic picture may change, as consumers learn to spend less or differently in reaction to higher costs.
Appliance Industry Feeling the Pressure
And this is true for major home appliances, too—refrigerators, dishwashers, washing machines, all use a lot of steel. The proposed increase in tariffs would lead to price increases of 5%-10%. That pattern is similar to the price increases we experienced from June 2018 to April 2019 in Trump’s first term.
Glass manufacturers in this critical sector are looking forward to significantly increased input costs that will be passed along to end consumers. The rapidly increasing tariffs have caused critical long-term affordability concerns for some of these essential goods.
The Beer Institute voiced these concerns directly, stating, “Paying a tariff-laden price on all aluminum drives up the cost of doing business and makes consumer goods more expensive.” This mood is indicative of an increasing unease among manufacturers and consumers alike about the widespread impacts of tariff policies.
