The real costs of Tariffs

Tarriffs are in the news today, and appear to be in a strong state of change.   I think most of America can agree that we have had significant trade imbalances for decades in this country and part of that reason is the tariffs that are placed on our goods and services leaving this country to others.   Roger gives us some insights into how tariffs and trade wars can impact us in the months ahead.  It is good insights and gives us some perspectives to add to our knowledge of this ongoing battle to bring tariffs back into line across the world.   

 

 

 

THE REAL IMPACT OF TARIFFS
BY
THE M&A LAW FIRM
ROGER L. NEU, JD, CPA

Hysteria sets in as the main street media rages about how terrible tariffs are, and that the US is now engaged in “TRADE WARS.” Sounds pretty ominous per the usual misinformation, but are the tariffs really taking as big a toll as enthusiastically reported? On closer examination, the estimated cost increases in three primary areas relating to the steel and aluminum tariffs are as follows:

• Construction costs would increase by about 0.2% adding $614 to a $300,000 home;
• Motor vehicle costs would increase by about 0.41% which would add $124 to a car costing $30,000; and
• Electrical equipment, appliances and component prices are estimated to increase by about 0.8 percent, but a washing machine or refrigerator that initially cost $1,000 to produce is expected to cost only $8 more.

My clients have indicated some good and some mixed results. No question that some industries will be more impacted than others, but thousands of new jobs are being created in critical areas of the US economy. Commodity prices are contracted for months and sometimes years in advance, so the impact is delayed in many cases. Is there really a “WAR” or just good negotiating to provide fair trade for the US? As you evaluate this issue, remember that 95% of the news will focus on the negative impacts of tariffs and only 5% of the news will focus on the positive. In reality, the jury is still out on the benefits and costs of tariffs. Stay tuned.

For more facts on this issue see:

http://economistsoutlook.blogs.realtor.org/2018/03/22/steel-and-aluminum-tariffs-expected-to-have-most-impact-on-construction-and-motor-vehicles/

Regards,
Roger