SAVANNAH, GA (WTOC) - A proposed tax on steel and aluminum coming into the U.S. from other countries has local and world markets looking at a possibility of a trade war.
While president Donald Trump, who announced the tariff proposal on Thursday, says that competition would be good and trade wars are easy to win, some analysts aren't so sure.
Steel and aluminum are in so many products and are used widely by manufacturers, even those right here in Chatham County, like JCB. To get an idea of how a 25-percent tax on steel imports and a 10-percent tax on aluminum imports could affect industries right here, we spoke to the former president of Chatham Steel. He says traditionally, the metal industry favors higher prices, but the U.S. industry has to remain competitive in the global market.
If the prices of metals like steel and aluminum are too high, he says we won't be able to export products around the world. He explains why prices do go up when a tariff on imports is assessed.
"If this does go through, we will see even more price increases, because when all of the sudden you're nearest competitor has got to raise his price by 25 percent, you'd be a fool not to raise your prices accordingly," said Bert Tenenbaum, former president of Chatham Steel. "The impact of the potential quotas that the President is talking about would be to raise the price of steel and aluminum, which will, in turn, raise the price for manufactured goods such as automobiles, appliances, heavy equipment, the kinds of equipment that JCB makes here locally. Gulfstream, a lot of aluminum goes into those planes, and so for the most part, they'll just pass those costs on in higher prices. Kind of like a tax, if you will."
What happens when the price of material goes up for manufacturers? That usually gets passed along to the consumer - you and me.
Tenenbaum says he's uncertain if the tariff proposal will hold up, and that in another week or so, we'll have a better idea where that tariff proposal is headed.