How Trade Tariffs Screw Over the Little Guy (Aluminum Foil Edition)
Donald Trump's protectionist tariffs against Chinese aluminum will double the price of a very widely used product: aluminum foil.
Donald Trump ran for president as a protectionist and is ruling like one. From former Reason Editor Virginia Postrel comes news of a massive hike on aluminum from China:
The Commerce Department has said it will impose preliminary duties of 97 percent to 162 percent on the Chinese imports that supply much of the U.S. market with thin aluminum foil. That's likely to have much more far-reaching effects on U.S. companies than the minor deals President Donald Trump announced on his trip to China.
Aluminum-foil buyers, many of them swing-state manufacturers, are reeling at the size of the duties, which would at least double the price of Chinese foil.
Think about how much stuff you buy uses aluminum foil. Actually, just read the partial list Postrel has created:
Aluminum foil wraps burritos, physics equipment and the highlighted tresses of hair-salon customers. It forms flexible ducts and lasagna pans, lines cigarette packs and fast-food sandwich wrappers. It hides between layers of film in flexible packaging. It protects aspirin bottles from tampering, petri dishes from light and tractor engines from overheating. It tops yogurt cups and peanut cans. It backs blister packs of antihistamines, antacids and birth-control pills. It goes into automotive parts and air-conditioning systems.
U.S. manufacturers rely on aluminum foil. So do nail salons, building contractors and bakeries.
In her Bloomberg column, Postrel talks to people in the foil industry. They are already looking for new suppliers since Chinese foil, which is state of the art and high-quality, is being artificially priced out of the U.S. market. America doesn't make that much foil because it's cheaper and more efficient to buy from, well, poorer countries; just two companies have mills in America that are making the stuff targeted by the tariffs. So this isn't going to Make America Great Again, it's just going to force U.S. customers to find new, more-expensive supplies. The countries whose manufacturers will win include Taiwan, South Korea, Bulgaria, and…Russia. Another possibility: Foil middlemen in Canada and Mexico might import Chinese product and, assuming NAFTA isn't ditched, send the product to the United States at some sort of mark-up.
For the want of cheap aluminum foil, your burrito was not lost exactly, but made more expensive for no good goddamn reason. Other than political pull and the economically illiterate policy decisions of President Donald Trump. Postrel concludes by talking to a foil broker who voted for Trump but is shaking his head of late:
"I think people hear, 'Make America Great,' and they think bringing jobs back to America. What jobs is this going to bring back?… It's going to improve the [domestic] aluminum manufacturers' bottom line. It's not going to improve it because they got better, or they got more efficient, or they figured out a better way to do it. It's going to be because they've been able to raise their price and fill their mills, because people don't have choices anymore."