Tariffs on Mexico will hurt American business

President Donald Trump said the United States will impose a 5% tariff on all Mexican imports, effective June 10. Trump warned that the tariff will increase until "the illegal immigration problem is remedied."

Posted: May 31, 2019 8:20 PM
Updated: May 31, 2019 8:20 PM

Tariffs on Mexico will be bad for American business. Period. How do we know that? Because other tariffs are already hurting American companies.

Business in the 21st century is complicated. Protectionist trade policy can backfire. Just look at two sets of tariffs imposed earlier by President Donald Trump.

In January 2018, Trump imposed a 20% tariff on imported washing machines. Whirlpool was ecstatic. "This is, without any doubt, a positive catalyst for Whirlpool," CEO Marc Bitzer said at the time. The company added 200 jobs in its Ohio factory in anticipation of a sales surge.

Whirlpool bet wrong. Separate tariffs on steel and aluminum caused Whirlpool's production costs to soar. Americans scoffed at higher washing machine prices. People who didn't urgently need new washing machines stuck with their old ones or went to the laundromat. Whirlpool sales fell last year and the company reported its first annual loss in 17 years. The company's stock is down 37% since the tariffs were announced.

Then there are the steel tariffs announced in March 2018. They were designed to help US Steel and Nucor, which had been losing business to Chinese steel companies for decades. The 15% import tariff led the American steelmakers to ramp up production and add 9,000 jobs.

US Steel and Nucor started making more steel — way too much. Demand for steel didn't budge, so all that new metal flooded the market and sent prices plummeting 25%. The stock of US Steel has fallen 70% since the Trump administration announced the tariffs. Nucor, the largest steelmaker in the country, is down 25% over the same period.

The Trump administration may have intended the tariffs to protect American businesses, but in reality they're hurting them. The market is global, and manufacturing is cheaper overseas. America's economy has been predominantly made up of services for decades. Tariffs can't bring back the old days when America exclusively made stuff. In the 21st century, America's companies need to buy stuff from overseas.

That's why tariffs raise costs for American companies, which in turn hike prices for American consumers. That is taking a toll on businesses and the economy at a delicate time for both.

The US economy remains strong, but signs are it's in the late stages of what has been a very long growth cycle. Consumer spending is slowing down and the trade war isn't helping: Americans spent 2.5% less on imported goods in the first quarter. Corporate profits fell for the second straight quarter, the US Commerce Department announced Thursday. Businesses are investing less as a result.

Yet Trump recently raised tariffs to 25% on $250 billion of imported Chinese goods. And, on Thursday, he threatened tariffs of up to 25% on Mexican goods.

America's businesses are not pleased. The US Chamber of Commerce and Business Roundtable — which represent businesses that employ a vast number of people — are ringing alarms.

A year and a half's worth of evidence shows tariffs are hurting, not helping, their intended targets.

Terre Haute
Clear
41° wxIcon
Hi: 72° Lo: 41°
Feels Like: 41°
Robinson
Clear
38° wxIcon
Hi: 72° Lo: 41°
Feels Like: 38°
Indianapolis
Clear
47° wxIcon
Hi: 71° Lo: 43°
Feels Like: 47°
Rockville
Clear
45° wxIcon
Hi: 71° Lo: 39°
Feels Like: 45°
Casey
Clear
47° wxIcon
Hi: 71° Lo: 43°
Feels Like: 45°
Brazil
Clear
41° wxIcon
Hi: 71° Lo: 41°
Feels Like: 41°
Marshall
Partly Cloudy
41° wxIcon
Hi: 71° Lo: 41°
Feels Like: 41°
Clear, Chilly Overnight
WTHI Planner
WTHI Temps
WTHI Radar

WTHI Events

 

Illinois Coronavirus Cases

(Widget updates once daily at 7 p.m. CT)

Cases: 1671275

Reported Deaths: 27903
CountyCasesDeaths
Cook63319811182
DuPage1078031375
Will910281124
Lake797931082
Kane68211868
Winnebago40918559
Madison40014592
St. Clair36230595
McHenry34584326
Champaign26931196
Peoria26845368
Sangamon25682284
McLean22947217
Tazewell20601330
Rock Island18783360
Kankakee17848248
Kendall16162113
Macon15259250
LaSalle14983285
Vermilion14303199
Adams13097152
DeKalb12114133
Williamson12027174
Whiteside8265183
Jackson808394
Boone790483
Coles7857122
Ogle754587
Grundy735386
Franklin7317115
Knox7244169
Clinton7113102
Macoupin6927104
Marion6907143
Henry661677
Effingham658099
Jefferson6523143
Livingston596098
Stephenson580992
Woodford575292
Randolph553799
Christian531882
Fulton525875
Monroe5243103
Morgan505299
Logan494274
Montgomery489881
Lee478060
Bureau442190
Saline433169
Perry432375
Fayette429564
Iroquois419977
McDonough373460
Shelby345848
Jersey335153
Crawford331330
Lawrence330833
Douglas326237
Union305848
Wayne301762
White279333
Richland279057
Hancock273035
Cass265330
Clark265240
Pike263358
Clay258254
Edgar256749
Bond255625
Warren243665
Ford242859
Carroll236038
Moultrie231433
Johnson225131
Wabash217019
Jo Daviess215129
Massac214148
Mason212752
Washington211628
De Witt204930
Greene204840
Mercer203435
Piatt200914
Cumberland189526
Menard171913
Jasper161021
Marshall141221
Hamilton133622
Schuyler107010
Brown106410
Pulaski103811
Edwards103418
Stark81228
Gallatin7878
Alexander71712
Scott7136
Henderson69814
Calhoun6902
Hardin59816
Putnam5614
Pope5476
Unassigned1632433
Out of IL70

Indiana Coronavirus Cases

(Widget updates once daily at 8 p.m. ET)

Cases: 1000163

Reported Deaths: 16309
CountyCasesDeaths
Marion1347632106
Lake660041156
Allen57441793
Hamilton46100461
St. Joseph44109607
Elkhart35696507
Vanderburgh32087477
Tippecanoe27796257
Johnson24902443
Hendricks23738354
Porter22802362
Madison18614404
Clark18424250
Vigo17347301
Monroe15180197
LaPorte15046250
Delaware14984259
Howard14626287
Kosciusko12217147
Hancock11630175
Bartholomew11505179
Warrick11255189
Floyd11013214
Wayne10897250
Grant9964218
Morgan9404176
Boone8863116
Dubois8227130
Dearborn817093
Henry8139151
Noble7984106
Marshall7838134
Cass7499119
Lawrence7403170
Shelby7138114
Jackson694088
Gibson6533113
Harrison644491
Huntington633999
Knox6273106
DeKalb626397
Montgomery6208109
Miami589797
Putnam575377
Clinton570271
Whitley560455
Steuben554675
Wabash5279101
Jasper524475
Jefferson506996
Ripley495685
Adams476073
Daviess4616113
Scott435869
Greene422096
Wells420987
Clay420260
White415962
Decatur4133101
Fayette404286
Jennings385160
Posey375343
LaGrange353978
Washington353249
Randolph341999
Spencer337342
Fountain332558
Sullivan326752
Starke313369
Owen312070
Fulton306567
Orange291762
Jay280445
Perry264752
Franklin264042
Carroll259132
Rush258832
Vermillion255454
Parke230026
Pike227943
Tipton226659
Blackford190540
Pulaski181855
Crawford158623
Newton156048
Benton150217
Brown144547
Martin137419
Switzerland134211
Warren120516
Union106815
Ohio84112
Unassigned0538