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Tariffs on global imports may bring price hikes to Utah, analyst says

Ryan Heninger stands in a rocket tower ride prototype at S&S Worldwide in Logan on Friday, March 9, 2018. New tariffs on steel and aluminum could hurt some Utah businesses. While it is too soon to know the overall economic impact in Utah of tariffs impose
Ryan Heninger stands in a rocket tower ride prototype at S&S Worldwide in Logan on Friday, March 9, 2018. New tariffs on steel and aluminum could hurt some Utah businesses. While it is too soon to know the overall economic impact in Utah of tariffs imposed or planned by the Trump administration, some local analysts are already convinced a full-scale trade war is getting underway.
Jeffrey D. Allred, Deseret News

SALT LAKE CITY — While it is too soon to know the overall economic impact in Utah of tariffs imposed or planned by the Trump administration, some local analysts are already convinced a full-scale trade war is getting underway.

"We are in the war, it's not a potential anymore," said Derek Miller, president and CEO of the Salt Lake Chamber, and outgoing president and CEO of World Trade Center Utah. "The war has begun. We hope that it's a short and small trade war, but that remains to be seen."

Last month, the Trump administration imposed a 25 percent tariff on steel and 10 percent tariffs on aluminum from Canada, Mexico and the European Union. The move was preceded in January by tariffs on foreign-made solar panels and washing machines.

Miller said the taxes will likely harm American businesses and consumers more than provide any kind of competitive advantage for U.S.-made goods and services. He noted that prices for steel have already begun to rise here and abroad, which is exactly what most economic observers had predicted.

"Like any business, they'll charge what the market will bear," he said. "Across the board, almost overnight, steel prices went up by almost a third."

He noted that as residential construction in Utah continues to escalate, the prices for homes and apartments will likely climb as the cost of steel for construction rises. Similarly, the price of commercial construction would rise as well, he said.

"Anything that needs to be built (will) increase," he said. "Eventually, it will be passed on to the consumer."

The Salt Lake Chamber signed onto the U.S. Chamber of Commerce’s coalition letter urging U.S. senators to support a tariff bill from Sen. Bob Corker, R-Tenn., which would require the president to submit to Congress any proposal to raise tariffs in the interest of national security under Section 232 of the Trade Expansion Act of 1962.

“Utah is a trade surplus state and one of the fastest-growing export economies in the country,” Miller said. “Tariffs and trade wars will have a negative impact on Utah’s economic success. Congress should assert its authority under the Constitution to ensure that any tariffs imposed under the guise of national security are weighed with the need to safeguard our nation’s economic prosperity.”

Utah GOP Sen. Mike Lee also supported the measure and worked with Corker to get a vote on his bill.

“The tariffs announced by the president this year impose a tax hike on the American people — one that will harm both workers and consumers," Lee said. "While I am sympathetic to the issues facing domestic steel manufacturers, there are better ways to address the steel industry's concerns.”

Miller said he hoped that the president's tariffs are part of a negotiation tactic that would not be ongoing. However, he was unsure if that was, in fact, the case.

"To date, I haven't seen this administration negotiating anything," he said. "For example, if we're trying to get China to the negotiating table to make a better trade deal, what trade deal are we working on?"

He acknowledged that trade conditions could be improved, particularly with partners like China. But in order to do so requires some kind of concrete plan in which all involved can participate fairly and equitably, he added.

In response to the Trump policy, Canada recently began imposing tariffs on $12.6 billion in U.S. goods. Some U.S. products, mostly steel and iron, face 25 percent tariffs, the same penalty the United States slapped on imported steel at the end of May. Other U.S. imports, from ketchup to pizza to dishwasher detergent, will face a 10 percent tariff at the Canadian border, the same as America's tax on imported aluminum.

Trump had enraged Canada and other U.S. allies by declaring imported steel and aluminum a threat to America's national security and therefore a legitimate target for U.S. tariffs. Canada is the United States' second-biggest trading partner in goods, behind only China.

On July 1, Prime Minister Justin Trudeau thanked fellow Canadians for standing united against President Donald Trump's sanctions and urged Canadian citizens to "make their choices accordingly" in considering whether to buy American products.

Trump has also tried to pressure Canada and Mexico into agreeing to rewrite the 24-year-old North American Free Trade Agreement to shift more auto production and investment to the United States. But that effort has stalled, and Trump said that he didn't expect a deal that he could support until after the U.S. midterm elections in November.

Meanwhile, the European Union on Monday slammed the Trump administration for considering tariffs on auto imports, saying they could lead to global retaliation against some $300 billion in U.S. goods amid signs of a brewing trade war.

European Commission spokesman Margaritis Schinas said the U.S. investigation into the possibility of auto tariffs "lacks legitimacy, factual basis and violates international trade rules," just like last month's U.S. tariffs on steel and aluminum imports.

The European Union argues that trade restrictions would likely lead to higher costs for U.S.-based producers, and in effect become a tax on American consumers. This would only be aggravated by the likely countermeasures the 28-nation bloc and other trading partners might take.

The E.U. responded to the steel and aluminum tariffs with "rebalancing measures" that hit about $3.25 billion worth of American-made products. The E.U. said the U.S. auto industry is in good health, but any restrictive duties could undermine that trend.

The impact of retaliatory measures by Washington's trading partners could total about $294 billion — or around 19 percent of total U.S. exports in 2017, the E.U. estimated.

Contributing: Associated Press