TARIFFS and DUMPING: What You Need To Know

posted by Bil Lako - 3.07.18

Will Trump’s proposed changes to tariffs and dumping impact you? In the short run, it will not. Besides scary headlines and threatening words from pundits, politicians, and leaders all over the world about a “trade war,” nothing is going to happen tomorrow. I tend to be a free trade guy, meaning I believe everyone in the world should be able to produce the goods they want and sell them across all borders at the best price possible. This sounds good when everyone is playing by the same rules. If you have one producer getting subsidized to help them produce the good cheaper, then the playing field is no longer fair.

This is what has allegedly been happening with China and others when discussing steel and aluminum imports. It has made it impossible for our domestic manufacturers to compete. The tariffs will bring the cost in line with reality and help our domestic production.

Tarrff Infographic

Infographic by

The long-term issue—the fact that steel and aluminum are going to cost more—means the input cost to make a beer can or car is going to go up. That means either the producer of those products will have to eat the additional costs thereby lowering their profits or pass along the cost to you the consumer, which means less money for you to spend on other things. Additionally, if a trade war breaks out then it will be bad for everyone as costs will increase across the board. I do not see that happening at this point, but one can never know.

What is the President thinking? To be honest, unless you are one of his family members or close personal friends, I doubt very seriously that anyone knows what he is thinking on any issue. I am hoping he is using this opportunity as a negotiating tactic to cut a better deal on NAFTA (North American Free Trade Agreement), to start pushing back on China and their trade practices, which in a lot of ways hurts manufacturing at home, and lastly to make sure our national security is protected. The United States cannot rely on other countries to produce essential items, such as steel and aluminum, during times of conflict. We must protect ourselves.

I will end on this note: The President is doing exactly what he said would during the campaign. Right or wrong, we elected him, and he is doing what he said he would do on tariffs.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, a financial advisory and wealth management firm that has been delivering comprehensive financial solutions to its individual, corporate, and institutional clients for 30 years. Mr. Lako is a Certified Financial Planner™ professional.