U.S. Trade Groups Say President Trump’s Steel Tariffs Will Cost American Jobs and Raise Prices

A broad swath of U.S. industries is unhappy with the tariffs that the Trump administration is imposing on aluminum and steel imports, warning the penalties will jack up costs, raise prices for consumers and potentially put people out of work.

Despite objections voiced by many business trade groups and lawmakers, the White House forged ahead Thursday with its plan to levy tariffs of 25 percent on imported steel and 10 percent on aluminum. The tariffs, which President Donald Trump says are needed to protect U.S. workers, are scheduled to take effect in 15 days.

Several industry trade groups pushed back against the necessity of the new policy, saying the tariffs will lead to higher costs for businesses and could spark a broader trade war.

“Today’s action could ultimately cost far more American jobs than it would create, and raise costs on consumer products,” said Gary Shapiro, president and CEO of the Consumer Technology Association, which represents more than 2,200 companies.

“The imposition of tariffs will undoubtedly result in previously uninvolved sectors being retaliated against and create a dangerous race to the bottom, which is a threat to our domestic economy and the entire global trading system,” Shapiro added.

U.S. automakers are among the businesses with the most at stake, given they account for 38 percent of the aluminum and 15 percent of the steel consumed in the country, according to Ward’s Automotive Reports.

There are about 1,100 pounds of steel and 400 pounds of aluminum in the average two-ton U.S. vehicle, according to the Center for Automotive Research, an industry think tank in Ann Arbor, Michigan.

The Alliance of Automobile Manufacturers, a major industry trade group, warned the tariffs will also drive up the price of steel made in the U.S. — a cost that it predicts will be passed along to consumers through higher prices on vehicles.

If the entire cost is passed to consumers, which may not be possible, it could add about $300 to the price of the average vehicle, said Kristen Dziczek, director of Center for Automotive Research’s Industry, Labor & Economics Group.

But automakers could absorb price increases or figure out some other way to offset the increases, Dziczek said. Plus, companies usually lock in steel and aluminum prices with long-term contracts, so it could take years for price increases to kick in, she said.

General Motors doesn’t expect the tariffs to hurt that much, partly because of its long-term contracts.

“We have shown we have the ability to adjust and adapt to a variety of market changes around the world and that will be our approach on this issue as well,” said the company that owns popular auto brands such as Chevrolet, Buick and Cadillac.

Beer lovers also may feel the ripple effects of the tariffs, according to the Beer Institute, a trade group representing the world’s largest brewers. It estimates the 10 percent tariff on the aluminum encasing most of the beer sold in the U.S. will increase the cost of the beverage by $348 million annually and threaten more than 20,000 jobs in the industry.

“Imported aluminum used to make beer cans is not a threat to national security,” said Jim McGreevy, the Beer Institute’s CEO.

The tariffs would have a far reaching impact that goes beyond beer cans and cars to other products that people wouldn’t expect, such as furniture and lamps, said Hun Quach, vice president of trade at the Retail Industry Leaders Association, a retail trade group counts such members as Walmart, Best Buy and Home Depot.

Quach dismissed Commerce Secretary Wilbur Ross’s recent comments that these tariffs would mean insignificant price increases on cans of Campbell soup and Coca-Cola. She argued that view doesn’t take into account the volume of cans and other items that companies have to buy that would result in significant costs to their bottom line.

The tariffs also come at a time when retailers are rushing to remodel their stores and build huge e-commerce distribution centers that require steel, Quach noted.

“Our point is that these tariffs are going to have a bigger impact on our American economy than what their goal is,” she said.

The head of the National Retail Federation, whose members include department store chains, grocery stores and other merchants around the world, also raised objections to the tariffs Thursday, calling them a tax on all Americans.

“A tariff is a tax, plain and simple,” said Matthew Shay, president and CEO of the NRF. “Consumers are just beginning to see more money in their paychecks following tax reform, but those gains will soon be offset by higher prices for products ranging from canned goods to cars to electronics.”

Housing trade groups also took a dim view of the tariffs, saying the policy would lead to higher costs and hinder development at a time when the nation faces a severe shortage in homes and rental housing.

“Policies that increase the cost of development stand in the way of meeting urgent housing demand as well as imperil the economic and employment gains achieved through tax reform,” said Cindy Chetti, senior vice president of government affairs at the National Multifamily Housing Council, which represents 1,200 apartment housing owners, managers, developers and investors.

The National Association of Home Builders noted the tariffs would pile on more costs on builders and, ultimately, homebuyers.

The tariffs could lead to job losses at aerospace and defense companies, said Eric Fanning, president and CEO of the Aerospace Industries Association, which represents more than 300 manufacturers and suppliers.

The tariffs are welcome news for aluminum and steel companies, however.

Even before Trump signed off on the new tariffs, U.S. Steel provided him with a proof point for his rationale by announcing it would reopen part of a Granite City, Illinois, plant that closed in 2015 in a move that the company blamed in part on “unfairly traded imports.”

The reopening will bring back about 500 U.S. Steel workers who had lost their jobs in the closure.

U.S. Steel CEO David Burritt hailed Trump for taking steps “to begin to level the playing field so companies like ours can compete, win and create jobs that support our employees and the communities in which we operate as well as strengthen our national and economic security.”

–The Associated Press

Report: U.S. Employers Went on a Hiring Spree in February

U.S. employers went on a hiring binge in February, adding 313,000 jobs, the most in any month since July 2016, and drawing hundreds of thousands of people into the job market.

At the same time, average wages rose 2.6 percent over the past 12 months, a slowdown from January’s accelerated pace, which had spooked investors because it raised fears of high inflation. Friday’s jobs report from the government revised down January’s year-over-year wage gain by one-tenth of a point to 2.8 percent.

An influx of new job seekers in February kept the unemployment rate unchanged at a low 4.1 percent.

News of the unexpectedly robust job growth sent stock futures up after the report was released at 8:30 a.m. Eastern time.

Last month’s hiring surge might have reflected, in part, confidence among some businesses that the Trump administration’s tax cuts will accelerate consumer and business spending. Consumer optimism jumped to its highest level since 2000 last month, likely reflecting higher after-tax incomes resulting from the tax cuts.

Hiring was solid across a wide range of industries in February, including higher-paying sectors such as construction, which added 61,000 jobs, the most since 2007, before the Great Recession began. Retailers added 50,000, the most in two years. Financial services gained 28,000, the biggest increase since 2005.

The government also revised up its estimate of job growth in December and January by a combined 54,000.

The consistently strong pace of hiring has led many more people who had been on the sidelines to start looking for work. Most of those new job seekers found work in February, leaving the number of unemployed little changed. The proportion of adults who either have a job or are looking for one rose to 63 percent from 62.7 percent.

In the meantime, economists are calculating how the Trump administration’s decision Friday to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum might affect the job market. The Trade Partnership, a consulting firm, estimates that the tariffs could eliminate roughly 145,000 jobs. Still, the administration has opened the door to so many possible exemptions from the tariffs that an accurate estimate of the impact on jobs is all but impossible.

Steel and aluminum producers would presumably hire more people. But those gains would be more than offset, Trade Partnership calculates, by sharp job losses among companies that use the metals, such as automakers, packaged food companies and those that make industrial machinery.

During 2017, the stock market, as measured by the S&P 500 index, surged 19 percent, partly on anticipation of corporate and individual tax cuts. Yet barely a month after the tax cuts became law, investors shifted their focus to the potential consequences: Faster growth that might intensify inflation and lead the Fed to accelerate its rate hikes.

There have been some signs that price pressures are picking up. But overall, inflation remains in check. The inflation gauge that the Fed tends to monitor most closely shows an increase of just 1.7 percent from a year earlier, below the central bank’s 2 percent target level.

Most economists expect growth to pick up in the coming months and to accelerate inflation slightly by year’s end. They have forecast that the economy will expand at just a 2 percent annual rate in the January-March quarter before topping 3 percent in the next two quarters.

And manufacturers expanded at the fastest pace in nearly 14 years in February, according to a survey of purchasing managers.

The housing market, too, remains generally solid, with demand for homes strong in much of the country, though rising mortgage rates may begin to slow sales.

–The Associated Press

Why Trump’s Proposed Steel and Aluminum Tariffs Would Be Terrible for Business

When a boy cries wolf for the first time, you’re caught by surprise.

When he does it every day, you stop paying attention.

The stock market reacted swiftly to President Trump’s latest bluff — that he plans to invoke a rarely used presidential power to impose hefty tariffs on steel and aluminum imports. The Dow dropped more than 400 points amid fears of a trade war. Shares of Boeing, GM, and Ford dipped, too. 

But company executives on Main Street? We’re becoming accustomed to this kind of normalized chaos. I’m still waiting for Trump’s mythical wolf to appear.

The downside to tariffs (and it’s basically all downside)

Strategically, you could argue in favor of tariffs by saying you should never be too beholden to another — another country or even another supplier — for a specific product or item.

That’s about the only positive thing I can say about tariffs. From my perspective, tariffs are a short-sighted form of crony capitalism.

Trump argues that his proposal is a tax levied on our foreign competitors. He gets to show his support for the blue-collar worker and wins attention (which he obviously likes) for trying to save steelworkers’ jobs.

But a tariff on steel and aluminum only spreads the pain of employing those workers. Business owners must pay higher prices for supplies and then pass those costs on to every single one of us who uses products made from steel and aluminum. We will all pay for those jobs. It amounts to a tax on American consumers.

Some experts are saying the increase could amount to less than one half of one percent. But it’s like cheating on a diet. Once you do it, it opens the door to more trips to the cookie jar. And why should the consumer have to bear that burden?

All alone on the playground

Tariffs keep smaller manufacturers and more adept manufacturers from entering the market. Most business people — except steelmakers and aluminum smelters — certainly won’t benefit from Trump’s proposal.

We’ve seen this dynamic play out in countries known for their high tariffs. Take India, for example, which imposes a high tariff on many imports. When I led Big Ass Fans, that kept us from doing significant business there. Same with Brazil.

Manufacturers in countries that levy high tariffs make inferior products, because there’s no competition. Their domestic wares are, effectively, the only ones sold within their borders, preventing consumers from choosing anything else. These countries prefer to go off and play by themselves, rather than allow the competitive market as a driver for innovation.

Stacking the deck against the free market

Now, in the United States, Trump seeks to stack the deck against the market forces that should decide our economic fate. He’s taking power from the “invisible hand” of the free market and giving it over to the government. Because the costs are spread across all of us, it amounts to a few bucks each. People may not notice, but it all adds up.

Governments, by nature, are heavy handed. Any sort of regulation or tax is more onerous than it looks. It’s an added cost, and in any sort of business, additional cost means you have less to spend on building more product, employing more people, and growing beyond your current size and scope.

To tell you the truth, I have no idea what Trump is actually trying to accomplish. Will we actually see tariffs on steel and aluminum? Will they spark an international trade war? Or is this part of the art of negotiating?

Who the hell knows. But I’ll bet you dollars to donuts there’s no wolf lurking around the corner. 

Parkland Businesses Respond to Mass Shooting: ‘It’s Important to Give Them Routine’

Maryam Braun was driving to work on the afternoon of Valentine’s Day when police cars and fire trucks sped past. The co-founder of Evolution Martial Arts, a Parkland, Florida karate school, would soon learn that more than 20 of her customers were under lockdown at the local high school, where a shooter had opened fire and slaughtered several students.

“Parkland is a small community,” Braun tells me. “The victims are people that I know, families that walk by my school. Right now, we’re all in shock.” She adds that, fortunately, none of her own students were injured in the attack.

Many others weren’t so lucky. As of Thursday afternoon, as many as 17 people were killed in a mass shooting at Marjory Stoneman Douglas High School–the most deadly such incident since 2012, when 20 students and six adults were killed at Sandy Hook elementary school in Newtown, Conn. Authorities have identified the Parkland gunman as Nikolas Cruz, 19, a former student at the school with a history of abnormal behavior, and ties to an alt-right white supremacist group.

Staying Open

In the immediate aftermath, more than a dozen local businesses are reeling from the events, and trying to find meaningful ways to support the community. For Evolution Martial Arts, that means business as usual. “Everything is running as usual, and I think that’s important,” says Braun. “The kids need to get back to their routine and have some sort of normal. Parents right now are struggling to figure out what to do with themselves,” she adds. The company, which she launched with her husband in Parkland fourteen years ago, generates around $250,000 in annual revenue, serving around 200 people.

Andrew Shulz, the founder of a local dance studio called Next Level Performing Arts, takes a similar approach. Although Shulz canceled classes on the afternoon of the shooting and Thursday, he says that he’ll be open for business on Friday. “We are going to a dance competition this weekend, so we have to practice,” he says. “It sounds trivial, but these kids have been working since August, and I think that just canceling everything could make the situation worse,” he adds.

Shulz is concerned, however, about the future of his six-person firm, and the Parkland business climate more generally. Parkland is an affluent suburb of Fort Lauderdale. “When something like this happens–when you hear the word ‘Columbine’–people freak out,” says the entrepreneur, referring to the 1999 shooting at Columbine High School, in which 12 students and a teacher were murdered. “I’m absolutely concerned about losing business. Now people will be frightened to be here,” he adds.

To his point, Orlando saw fewer hotel occupancies in the months after the 2016 Pulse night club shooting, according to the industry tracker STR Inc., though overall visitation to the city was higher than in 2015. Based on the economic effect of past shootings, it is fair to say that short-term losses are likely in Parkland. Whether the tragedy will hit businesses in the long term is still unknown.

Offering Solace

Other business owners are supporting the community in more subtle ways. Janna Drucker, the founder of a Parkland boutique called Fannies Finds, has a tradition of slipping small trinkets emblazoned with motivational quotes into customers’ bags when she senses they’re having a hard time. The way she explains it, in a phone call with Inc.: “I can feel when people are hurting.” Drucker plans to do this with dozens of customers in the coming days, as the community grieves the loss of its students, peers, and colleagues. “When you’re a business owner, you really get to know the residents,” Drucker adds. “My role is to provide whatever comfort I can, even if it’s small.”

Emotions ran high on Thursday, with reactions ranging from fear to sadness and even fury. Indeed, some see the tragedy as preventable with more legislation that regulates gun ownership. “Of course I’m frustrated. I teach self-defense,” Braun, the martial arts entrepreneur, tells me. “I can teach and teach and teach, but nothing can compare to a weapon of that force.”

She lets out a long, tortured exhale. “In this day and age, this is the new normal,” Braun continues. “I talk to my four-year-olds about looking for exits and finding things to hide under.”

U.S. Employers Add 200,000 Jobs in January and Wages Rise at Fastest Pace in 8 Years

U.S. employers added a robust 200,000 jobs in January, and wages rose at the fastest pace in more than eight years, evidence of a consistently healthy job market.

The pay gains suggest that employers are increasingly competing for a limited pool of workers. Raises stemming from Republican tax cuts  and minimum wage increases in 18 states also likely boosted pay last month.

The unemployment rate remained 4.1 percent for a fourth straight month, the lowest level since 2000, the Labor Department said in its monthly jobs report Friday.

The figures point to an economy on strong footing even in its ninth year of expansion, fueled by global economic growth and steady consumer spending at home.

The pickup in hourly wages, along with a recent uptick in inflation, may make it more likely that the Federal Reserve will raise short-term interest rates more quickly in the coming months.

Average hourly pay rose 9 cents in January to $26.74, after an even bigger increase in December. Compared with 12 months earlier, wages rose 2.9 percent, the biggest gain since the recession ended eight years ago.

Weak wage growth has been one of the economy’s most persistent shortcomings for nearly a decade. But with fewer workers to hire, employers are being forced to raise pay. Some of January’s increase reflects one-time increases, such as the minimum wage hikes in some states.

Hiring was broad-based last month. Construction companies added 36,000 jobs, lifted by demand for new homes and remodeling.

Manufacturers added 15,000, health care 26,000. Professional and business services, which includes highly-paid jobs in engineering and accounting, added 23,000. Restaurants, hotels, bars and entertainment gained 35,000.

Most other recent economic data have also been encouraging. Factories, for example, expanded rapidly in January, according to a survey of purchasing managers, in part because a weaker U.S. dollar and solid growth overseas have boosted U.S. exports.

And many Americans appear confident enough to buy homes: Sales of existing houses reached their highest level in 11 years in 2017. At the same time, would-be buyers are struggling to find suitable homes because so few properties are available for sale. The demand for housing helped lift home building in 2017 to its fastest pace in a decade. Construction companies added 210,000 jobs last year, the most in two years.

–The Associated Press

Trump’s State of the Union Address: Why What He Didn’t Say Matters

As State of the Union addresses go, President Trump’s first foray was a crowd pleaser–unless of course you’re interested in some of the specific policy issues that many fast-growth entrepreneurs were hoping to hear about.

Over the course of his nearly 90 minute State of the Union address on Tuesday night, President Trump was surprisingly quiet on entrepreneurship. And while he mentioned small businesses several times throughout his speech, Trump didn’t say anything new about plans to help spur them forward, which raises questions about his focus in 2018 and beyond. He did, however, take ample opportunity to bask in his administration’s key legislative victory, the Tax Cuts and Jobs Act, which was passed into law late last year. 

“We slashed the rate so American companies can compete and win against anyone else, anywhere in the world,” the president said, referring to a key provision of the law, which reduced the corporate tax rate to 21 percent from 35 percent.

He further recognized more than 10 notable attendees over the course of the address, including the co-founders of Staub Manufacturing Solutions, a Dayton, Ohio-based metal fabricator that credits its best year in its 20-year history to Trump’s economic policies and the promise of tax reform. The new law, for instance, allows small businesses to deduct 20 percent of their business income. The now 37-person company recently handed out raises and nearly doubled its staff. “It’s a good feeling,” the President ad-libbed, referring to Staub’s expansion in 2017.

He also included a hat-tip to corporate giants including Apple, Disney, and Starbucks, which have promised to funnel their tax savings into bonuses for employees and hiring more workers. Indeed, many U.S. businesses have cheered the passage of the new tax law, anticipating a boon to their bottom line: “Our members are overwhelmingly in favor of tax reform,” said Jack Mozloom, a spokesperson for the Nashville-based National Federation of Independent Business, in an interview with Inc. late last year.

The speech was remarkable for what Trump didn’t say. He spoke at length about immigration reform and called on bipartisan support for a down-the-center solution, but he didn’t mention actual plans for fixing issues with the H-1B visa program, which allows thousands of people in specialized fields to work in the U.S.

The President devoted only 78 words of his 5,200 word address to trade, the subject that he has previously credited for winning him the election–and which carries major implications for American business owners. “Trump won’t tell the public or Congress key information about trade negotiations,” noted Senator Ron Wyden (D.-Oreg.,) responding to the State of the Union speech on Twitter. “Without it, we can’t know if he’s making a good deal for Americans.”

Indeed, Trump said surprisingly little about the re-negotiation of the North America Free Trade Agreement, or NAFTA, which recently wrapped up its sixth round of talks in Montreal this month. The President has repeatedly vowed to withdraw the U.S. from the decades-old trade agreement unless partners Mexico and Canada are willing to make considerable concessions, such as re-classifying the “rules of origin” on certain products in the trade zone, with an eye toward reducing the U.S.’s more than $50 billion trade deficit. “America has finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our wealth,” the President said Tuesday. “The era of economic surrender is totally over.” The next round of NAFTA talks is set to begin in Mexico early next month, though U.S. trade secretary Robert Lighthizer has complained that the negotiations are proceeding too slowly. 

Of course, addresses like these are oftentimes just ceremonial–and don’t always equate to legislative focus. Whether trade deals and immigration reforms come to fruition during Trump’s time in office is still a mystery. 

How Your Business Changed After a Year of President Donald Trump

Donald Trump‘s first year in office may have been laden with controversy, political squabbling, and tweet storms, yet the reality-TV star turned U.S. president also managed to get a singular piece of legislation through that should loom large for businesses big and small for years to come.

With the passage of the Tax Cut and Reform Bill and its key business incentives for pass-through entities like LLCs and S Corps, small businesses should see their bottom lines balloon. According to an estimate from the Joint Committee on Taxation, the new 20 percent income deduction for pass-through businesses will reduce federal revenue by $415 billion for the eight years in which it is in effect. “It means that this provision is creating roughly $415 billion in savings for pass-throughs,” says Scott Greenberg, an analyst at the Tax Foundation, a conservative-leaning think tank in Washington, D.C.

Of course, not every policy Trump has spearheaded in the last 12 months will benefit businesses. Here are three ways Trump has changed your business, for better or worse.

1. Tax reform

Republican lawmakers achieved their largest legislative achievement of 2017 by passing a sweeping overhaul of the tax system in December. A key feature of the law involves the 20 percent deduction for pass-through income–that is, business income that is taxed at an individual tax rate instead of through the corporate tax structure. About 40 million taxpayers claimed pass-through income in 2014, according to data from the U.S. Treasury

This tax plan isn’t without controversy: a Treasury Department analysis found that 69 percent of pass-through income goes to the top 1 percent of households, meaning it isn’t always benefiting small businesses.

Kyle Jensen, the associate dean and director of entrepreneurship at the Yale School of Management, says the tax cuts will have a greater impact on small-business owners–people who, say, run local construction companies–rather than emerging entrepreneurs who aim to become the next Mark Zuckerberg. 

2. Deregulation

Trump’s move to ease regulatory burdens on businesses has been palpable, says Steve Kaplan, a professor of entrepreneurship and finance at the University of Chicago Booth School of Business. “There were all sorts of regulatory tentacles out there that, I think, demotivated a lot of small businesses,” Kaplan says. “You talk to people in small and large businesses, that burden being lifted has been a real positive.”

In the last year, Trump rolled back regulations on environmental protections, financial services, and health care, calling it the “most far-reaching regulatory reform” in U.S. history. Kaplan believes the changes are beneficial for large and small businesses, even if the public has mixed or negative reactions. He noted that this is especially true for the Environmental Protection Agency, where Trump has made the strongest effort to reverse Obama-era policies.

“Whether they go too far in deregulating, that remains to be seen,” Kaplan says. “Many small businesses would say they went too far on regulating.”

Additionally, the Federal Communications Commission voted in December to rollback Net Neutrality regulations that stopped broadband providers like Comcast and AT&T from blocking websites or charging for higher-quality service. While customers will not see potential changes immediately, Jensen says the repeal of Net Neutrality isn’t helpful for the economic growth of the country. He added that the growth of the country is dependent on startups, and the new rules will make it difficult for smaller companies to compete.

3. Immigration reform

Between the wall on the U.S.-Mexico border and the status of the undocumented young people who were brought to the country as children (known as Dreamers), immigration has been a major policy issue for the Trump administration. Trump started his presidency by issuing a travel ban on seven predominately Muslim countries, but it was quickly shut down by a federal judge in Brooklyn.

Then, in September, Trump ended the Deferred Action for Childhood Arrivals program, also known as DACA. While he has recently said that he’s open to a path to citizenship after 10 to 12 years for Dreamers, the future of those hundreds of thousands of people is still uncertain.

The Trump administration has also taken steps to make it harder for American companies to hire skilled foreign workers through the H-1B visa program. While the administration hasn’t made any changes to the law, there’s been an increase in the number of “requests for evidence” which are sent by the U.S. Citizen and Immigration Services department. These requests are a standard part of the process and ask the applicant for more information, but between January and November of last year, the U.S. Citizen and Immigration Services department issued about 40 percent more requests than in all of 2016, according to data from the department.

And that’s not good for business. “Anything we do to essentially make it more difficult for people, for talent, to come here, will impoverish us,” says Yale’s Jensen. He added that immigrants are more likely to start a company than native born people, in part because they don’t have the same access to the labor market. What’s more, Jensen believes American entrepreneurship will suffer if it’s difficult for people to come to the U.S.

“I think it’s a problem now, and we should be focusing on ensuring that we are as open as possible to the greatest people on earth,” Jensen says. “If you are a great and incredibly talented person, America should be bending over backwards to roll out the red carpet for you.”