AILSA CHANG, HOST:
President Trump has ordered steep tariffs on imported steel and aluminum. That extends a trade battle that Trump launched the first time he was in the White House. The president shared his idea over the weekend with reporters traveling aboard Air Force One.
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PRESIDENT DONALD TRUMP: Any steel coming into the United States is going to have a 25% tariff.
MARY LOUISE KELLY, HOST:
Steel - and Trump wants to do the same thing with imported aluminum. So how has this idea been received by businesses that use steel and aluminum, and how might it impact your prices at the grocery store? For help answering, we are joined by NPR's Scott Horsley. Hi, Scott.
SCOTT HORSLEY, BYLINE: Hi, Mary Louise.
KELLY: Scott, I think you and I have seen this movie before. I mentioned...
HORSLEY: Yeah.
KELLY: ...This is - tracks what we saw in the first Trump administration. Just give us the movie plot summary.
HORSLEY: Yeah, this is in some ways a rerun of Trump's first season in the White House, when he imposed 25% taxes on all imported steel and 10% taxes on imported aluminum. Some countries were eventually exempted from those tariffs, but imports from other countries are still subject to these taxes, and now Trump wants to extend them. But, you know, this could backfire. Recall, Trump says he got elected in part because Americans were fed up with the high cost of groceries. These tariffs won't help with that. In fact, they'll do the opposite, says Robert Budway, who's president of the Can Manufacturers Institute.
ROBERT BUDWAY: The tariffs will definitely increase inflation on the price of canned foods, and the consumer will feel it and see it.
HORSLEY: You know, a tariff that drives up the cost of a can of soup or green beans or a six-pack of soda pop is not likely to win any friends at the supermarket, where many people are already fed up with high prices.
KELLY: So, the most basic question, why impose these tariffs?
HORSLEY: One reason might be to raise revenues to offset the cost of tax cuts. Another reason might be to prop up the domestic steel and aluminum industries. When tariffs were first imposed back in 2018, we did see a drop in the share of steel that was imported. Today it's somewhere between 25 and 30%. We've also seen some consolidation in the steel industry, which has given U.S. steelmakers more power to raise prices. But, you know, while those price hikes might be good for the steel companies, economist Katheryn Russ of UC Davis says they really weigh on the much larger universe of businesses that use steel and aluminum.
KATHERYN RUSS: Increasing the cost of imported steel increases costs for U.S. manufacturers who use steel. And we've seen that that can have measurable impacts on their hiring, and it has measurable impacts on their ability to export.
HORSLEY: Russ estimates that Trump's first round of steel and aluminum tariffs wound up costing the U.S. about 75,000 manufacturing jobs within the first two years.
KELLY: Scott, what kind of reaction are you watching for, if Trump does indeed follow through with these tariffs?
HORSLEY: It's likely to be mixed. You know, I talked a couple of months ago with Mark McClellan, who runs an aluminum business down in Texas that makes things like window frames and auto parts. He generally welcomes Trump's protectionist instincts because he's facing a lot of cheap foreign competition himself. But at the same time, he acknowledges the original aluminum tariffs made it more expensive to do business.
MARK MCCLELLAN: It drove up our raw material costs by 10%. Whether we imported them or not, even if it was domestically produced, it just raises your cost 10%.
HORSLEY: And by taxing aluminum but not imported products made from aluminum, Trump could actually make it harder for McClellan to compete with foreign rivals.
KELLY: NPR's Scott Horsley, thanks.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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