Wholesale prices in the United States are decelerating–the latest sign that inflationary pressures may be easing more than a year after the Federal Reserve started increasing interest rates. This is good news for American consumers. For the first time since the Great Recession, one in two Americans says they’re worse off financially than they were the year before.
Yet amid this stress, one steelmaker in Ohio, Cleveland-Cliffs, is urging the federal government to take an ill-advised action that would guarantee its profitability at the expense of every family’s budget.
The steelmaker wants Secretary Gina Raimondo’s Commerce Department to impose tariffs of up to 300% on “tinplate” products from eight countries. Cleveland-Cliffs filed the petition along with their union. U.S. Steel, the only other major tin mill steel producer in the U.S., opted not to participate.
Tinplate steel is used in all kinds of cans and containers, for everything from soup, canned vegetables, and tuna to household cleaners and bug spray. American manufacturers import tons of tinplate steel every month.
Cleveland-Cliffs says foreign manufacturers are dumping their steel in the American market at unfair prices. Taking advantage of the geopolitical moment, the company has focused its complaint on China. But tinplate is not a national security issue, and China is a red herring. It’s not the main source of U.S. imports, making up less than 10%.
Our closest European allies would face the bulk of the tinplate duties, in a move that’s sure to upset trans-Atlantic partners while driving grocery prices higher. That’s precisely the intent of Cleveland-Cliffs: turning to the tariffs and abusing U.S. trade policies after seeing margins sag just as steel prices settled down from COVID-era highs. By imposing the duties on foreign steel, Cleveland-Cliffs intends to regain those margins and drive a pricing floor, paid for by U.S. consumers.
Ultimately, ordinary people would bear those additional costs, through higher prices. The average American has about 24 canned goods stocked in the pantry at any given time. Nine in 10 parents say they use at least some canned items to feed their families each week.
Higher prices for canned goods would be an especially big burden for those struggling to make ends meet. The 42 million Americans enrolled in the Supplemental Nutrition Assistance Program, or SNAP, are already facing up to hundreds of dollars a month in cuts to their benefits as increases put in place during the pandemic expire.
These tariffs would also devastate those who rely on food pantries to feed themselves and their families. Every year, over 53 million Americans depend on the nation’s 60,000-plus food banks, pantries, and meal programs. Non-perishable canned goods are essential to keeping these efforts running.
Tariff proponents say it’s foreign companies who pay them. Wrong. It’s U.S. consumers. According to a new report on Trump-era steel tariffs from the International Trade Commission, every 1% increase in tariffs leads to an increase in the price of imports of nearly 1%.
In other words, tariffs are passed on directly to U.S. manufacturers and consumers. Cleveland-Cliffs is, quite literally, proposing a “can tax,” with the receipts paid to them. This new round of proposed tariffs would line the pockets of the company asking for them, a $10 billion mining and steel production conglomerate whose yearly revenue has increased tenfold since the onset of the pandemic. Cleveland Cliffs took full advantage of record steel prices then, not to mention Section 232 tariffs and import quotas they already enjoy on tinplate.
U.S. steel producers only have the capacity to provide about 50% of all the tinplate steel needed for domestic canned goods needs–and that steel often does not meet various quality requirements set forth by can manufacturers. Some types of tinplate, like drawn-and-ironed steel, aren’t even made in the U.S. by Cleveland-Cliffs. But who wants facts to get in the way of a good story? If the duties are imposed, every American household will pay the can tax every time they go to the grocery store.
The proposed tariffs would force the consumer products industry to offset the “can tax” price increases by increasing the price for consumers or cutting production. Our industry provides 20.4 million Americans jobs–10.4% of total employment–and contributes over $2 trillion to our economy. That’s more than 10 times the number of iron and steel jobs and roughly four times the economic output of American iron and steel companies. One recent study from the Trade Partnership found that for every steel worker who would benefit from the tariffs, 600 other manufacturing workers in downstream industries would see their livelihoods threatened.
Americans shouldn’t have to subsidize multi-billion-dollar steel companies at the grocery checkout. The Biden administration should reject this outrageous petition.
David Chavern is president and CEO of Consumer Brands Association, the trade association for America’s $2.1 trillion food, beverage, and consumer products industry.
Source: Fortune.com
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