Jan 28, 2020

Americans pay the full cost for Trump's aluminum tariffs

Photo: Jim Watson/AFP/Getty Images

President Trump's tariffs have notably increased the price of aluminum for U.S. businesses and consumers, a study provided first to Axios shows.

Why it matters: Trump has insisted the cost of the tariffs would be borne by China and other exporters, but the data shows that Americans are paying the costs.

  • "It’s pretty safe to say that it's 100%," Douglas Holtz-Eakin, president of think tank American Action Forum and a former director of the Congressional Budget Office, tells Axios.

Background: The price of aluminum worldwide spiked in April after the Treasury Department put sanctions on Russian producer Rusal, following Trump's announcement of 10% aluminum tariffs on every country (with exceptions eventually carved out for allies like Australia, Canada and Mexico).

  • Those price increases have since unwound in global markets, but U.S. customers continue to pay higher prices, as shown by the so-called Midwest Premium.
  • The price increase appears to line up very closely with the 10% tariffs imposed by Trump.

The intrigue: Trump on Friday doubled down on the aluminum tariffs, adding derivative aluminum products such as nails, tacks, staples, wire and parts for cars and tractors, meaning more price hikes are likely on the way.

The bottom line: "There have been assertions that China is paying the tariffs," study co-author Holtz-Eakin says. "And that’s not true."

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China to cut tariffs on $75 billion of U.S. goods

Chinese Vice Premier Liu He and President Trump at the White House on Jan. 15. Photo: Mark Wilson/Getty Images

China will halve tariffs on about $75 billion of imports from the U.S., effective Feb. 14, the country's finance ministry said in statements posted to its website Thursday.

Why it matters: This is another sign of tensions easing in the prolonged trade war between the U.S. and China that's brought major uncertainty to the markets and hurt the U.S. manufacturing industry and farmers.

U.S. GDP growth slows to 2.3% in 2019

Data: Bureau of Economic Analysis; Note: Shows GDP average over the full year vs. prior year; Chart: Andrew Witherspoon/Axios

U.S. gross domestic product grew at a 2.1% annual rate in the final quarter of last year, the Commerce Department said on Thursday. For all of 2019, economic growth came in at 2.3% — less than the 2.9% in 2018.

Why it matters: The initial estimates from the government show that 2019 was the slowest pace of economic growth since Trump took office. The boost from the tax cuts gave way to pain from the trade war. Exports slumped last year, while uncertain business leaders held off on spending.

Go deeperArrowUpdated Jan 31, 2020 - Economy & Business

Most companies expect little to no benefit from China deal

A cargo ship in a port in Longbeach, California, in 2019. Photo: Mark Ralston/AFP via Getty Images

The phase one U.S.-China trade deal will have little to no impact on sales this year, according to 63% of companies who participated in the latest business conditions survey released today by the National Association for Business Economics.

Why it matters: President Trump has championed the agreement as a "sea change in international trade" and the deal's signing has helped power U.S. stock indexes to fresh record highs, but business owners and economists are less enthusiastic.

Go deeperArrowJan 27, 2020