Tariffs impact local economy

Published 3:00 am Saturday, July 21, 2018

On June 27, the Troy City Council approved the purchase of three new automated garbage trucks for a total of $675,000, although the trucks won’t actually be bought until next year.

The city made the move after the company providing the trucks notified the city that the price would go up if not locked in by the end of the month, due to steel tariffs that are expected to raise costs for the company.

On June 1, 2018, the United States imposed a 25 percent tariff on imports of steel, and a 10 percent tariff on aluminum, on the European Union, Canada, and Mexico.

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President Donald Trump has also imposed tariffs on washing machines and solar panels and has recently spoken about the possibility of imposing tariffs on auto imports.

The steel tariffs have already begun impacting the economy, including rising prices in equipment.

“I think it’s just a supply and demand – I don’t think the steel is coming from anywhere other than the U.S.,” Reeves said. “I think it’s supply and demand in anticipation of the tariffs.”

The purchase of the garbage trucks was not the only city project affected by the looming threat of tariffs. Reeves said there was also an urgency to purchase steel for Kimber Manufacturing before prices rose.

“We certainly worked with Whaley Construction to get the Kimber facility steel ordered in a timely manner, anticipating the possibility that prices could go up,” Reeves said.

Reeves also noted that components on large equipment on fire trucks has gone up since the implementation of the tariffs.

Donna Horn, president of the local Republican Party, said that the tariffs may bring short-term issues but could be better for the nation, and therefore the local economy, in the long run.

“My thinking is the majority of stuff we buy from overseas, we could buy in America,” Horn said. “If we buy things produced in America, we could support more American jobs. It seems that buying things from nations that are not friendly with us is not the best idea.”

Daniel Sutter, professor of economics and finance at Troy University, said that the tariffs could potentially bring more problems to the economy if they last over a long period of time.

“The effect ends up being more expensive imports relative to the domestically-produced product,” Sutter said. “It will show up in the prices of things that we buy­ …

If anything, with more time the impact of the tariffs on companies using steel is going to be greater.”

Sutter explained that U.S. companies that have already invested in manufacturing in the U.S. may try to wait out the tariffs and hope they are removed. However, as time passes, the companies could view moving out of country as a more profitable option.

Michael Slobodchikoff, chair of the department of political science at Troy University, said that tariffs have not been used by either political party often in modern times.

“Recently they have really been focused on free trade and lowering tariffs,” Slobodchikoff said. “This is part of globalization, it’s why we have Hyundai here producing, and so the increased tariffs really have an affect on everything.”

And while the Troy council was able to make moves to purchase steel and equipment before prices rose, Slobodchikoff said consumers may not have that same option.

“It is very hard to win a trade war,” Slobodchikoff said. “Consumers are about to really suffer. While the City of Troy can actually do something, the everyday consumer probably can’t. It will hurt pockets.”­­