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Wednesday, April 18, 2018

Who are the Americans most affected by Trump's tariffs?

Por Jade

The tariffs imposed by the White House on steel and aluminum from abroad came into effect last month. Soon after, Beijing responded by setting tariffs on more than 100 US products, including pork, fruit and wine. Donald Trump accuses China of stealing intellectual property (especially in the technology sector) and threatens to increase its trade barriers, while China warns that it will respond with new trade restrictions.

Economists have projected that the tariff dispute should have a limited impact on the US economy as a whole. But they have warned that the measures will cause a rise in prices that will end up affecting all kinds of products, from televisions to vitamins.

And in some sectors such as agriculture, aerospace and manufacturing, the effects could be severe. How are US companies facing a potential trade war? The new tariffs have benefited some companies, such as US Steel, which announced that it will expand its operations and create hundreds of new jobs. But his clients - many of them manufacturers in the center-west of the country - are worried. They say that the demand for US steel has risen - and consequently prices - putting the companies that must buy steel for their manufactured goods in a bind.

Roadtec, a 600-person company in Tennessee that sells asphalt paving machinery, has had to pay up to 40% more to its suppliers, according to Eric Baker, marketing director. "There is a lot of uncertainty," he explains, "the main question is how long this situation will last." Hundreds of companies have asked the Department of Commerce to make exceptions, including the Wisconsin firm, Seneca Foods Corp.

The company, which makes its own cans to store processed fruits and vegetables, is supplied with steel from abroad. And now it is in trouble because a ship from China is coming with 11,000 metric tons of the product and when it arrives at the port, it will have to pay a tariff of 25%. "We ask for exclusion for what is in the water, we cannot undo the purchase and we will probably have to assume the costs," says Leon Lindsay, Vice President of Acquisitions. The argument is that the food industry is so competitive that they do not have the option to pass the price on to consumers.

The farmers are also worried. Will Hsu, whose father started a ginseng-producing farm more than 40 years ago, had meetings in China last week with clients and vendors. "The issue came up with each of the clients that I met." And it has also happened to his employees. "They are worried". Ginseng growers in Wisconsin say they cannot lose access to the Chinese market, a country that has historically been the key buyer of American ginseng. Hsu says his farm - which employs about 400 people in the US and China- can handle a temporary rate increase. But if the situation is prolonged in the long term, things would change.

Farmers are also worried about foreign competition. About a third of US soy is sold in China, about US $ 14,000 million in exports, but Argentina and Brazil are also major exporters of the product. The drought has affected Argentine production, but Brazilian farmers expect the tariff dispute to cause an increase in demand for their product, explains Victor Carvalho of Informa, a commercial analysis consultant. Will Hutchinson, a fourth-generation farmer in Tennessee, hopes the problem does not continue to escalate: "Trade is of vital importance to China and the US we do not need to cut our noses to damage our face."

Nearly half of aluminum waste exports went to China last year, but US firms have begun to look to other markets. Randy Goodman is executive vice president of the company Greenland America in Georgia, a broker that buys and sells scrap metal around the world. He says that so far less than 10% of his business with China has been affected, but he is worried about the future. "The issue is that neither other countries nor domestic consumers will be able to buy the excess product," he says," there will be a surplus in the market that will eventually affect prices."

President Trump has said he is confident that the confrontation with China will strengthen the US economy and has tried to calm those who are concerned. "It will be very good when all this is over," he said. The people whose lives have been left in the middle of the conflict expect the president to be right.