Tariffs are the Last Thing U.S. Consumers Need
By David Chavern
Inflation is finally subsiding. It's welcome news for families who've struggled to keep up with rising costs of food, fuel, and transportation. Unfortunately, policymakers are considering a "can tax" that could increase certain grocery costs by up to 30%.
The proposal in question comes from an Ohio mining and steel conglomerate called Cleveland-Cliffs. The company wants the Commerce Department to slap massive tariffs -- up to 300% -- on steel shipments from abroad, even if it means higher consumer prices.
The tariffs would apply to "tinplate" steel imports from Canada, China, Germany, Netherlands, South Korea, Taiwan, Turkey, and the United Kingdom. Tinplate is used to make containers for food, coffee, and chemical sprays -- among other things.
Cleveland-Cliffs accuses foreign steelmakers of selling ultra-low-cost tinplate on U.S. markets. Imports are undermining America's domestic steel industry, their argument goes. The company is also accusing China of unfairly subsidizing its own tinplate producers.
These claims don't hold water. The reason the United States imports so much tinplate steel is far more benign than Cleveland-Cliffs claims. The fact is that some U.S. steel producers who previously specialized in tinplate have re-focused on other, higher-margin steel products, like steel used in machinery and vehicles. Even at full bore, U.S. producers would only be able to fulfill around 50% of domestic tinplate demand.
That American firms rely on high-quality tinplate imports from foreign firms that do specialize in tinplate production isn't something to bemoan; it's an example of why international trade is a positive good in the first place.
Cleveland-Cliff's focus on China is a smart PR strategy meant to appeal to rile up policymakers eager to counter Beijing's growing influence. But it doesn't align with the facts: Less than 10% of U.S. tinplate imports originate in China, a far cry from a national security crisis.
Cleveland-Cliffs can't be faulted for trying to quell competition. Steel, like many other raw materials, became more expensive during the pandemic. Cleveland-Cliffs saw its annual revenue grow 1000%. Now, as prices normalize, firms like Cleveland-Cliffs are desperate to preserve the bigger profit margins they've gotten used to.
But their proposed course of action goes directly against the broader interests of American consumers and the U.S. economy. The organization I lead, The Consumer Brands Association, recently released studies showing the proposed tariffs could lead to a 30% price increase for certain groceries, like canned food. That'd come down especially hard on low-income families who rely on food banks, where canned goods and other nonperishable items are staples. Our research also showed that Cleveland-Cliff's proposal would kill 40,000 manufacturing jobs by increasing the cost of tinplate.
Americans are finally getting a much-needed break from historic inflation. Massive new taxes would reverse this encouraging trend and subject families to new financial pain.
David Chavern is president and CEO of Consumer Brands Association, the trade association for America’s $2.1 trillion food, beverage, and consumer products industry.
