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Steel And Aluminum Tariffs Could Raise Prices For Consumers

President Donald Trump has recently announced that he will be placing a tariff on aluminum and steel to the tune of 10% and 25% respectively. This already comes on the heels of former tariffs the president placed on both solar modules and washing machines in an attempt to save domestic manufacturing jobs. This has led the solar industry to predict a loss of up to 23,000 solar panel installer jobs within the next few years. These blue collar workers were one of the demographics that most favored President Trump in the 2016 election over his opponent Hillary Clinton. But what exactly are tariffs and how do they affect consumers and their money? The basic premise behind implementing a tariff is that because other countries subsidize certain sectors, they are able to much more cheaply create those products. American manufacturing can’t possibly produce the same product at the same price and thus consumers turn to the cheaper product imported from a foreign country. Because of this, the government artificially raises the prices of foreign good through the use of a tariff when it is first imported. This is supposed to “level the playing field” and keep domestic manufacturing operational. While it may save a few jobs here and there, there are also some major issues with this tactic. The biggest one is that tariffs increase the cost of that product for all consumers meaning they have less money in their pocket at the end of the day. The biggest fear that others have in terms of tariffs are that they will set off a domino effect that down the line will lead to a full blown trade war. This can quickly lead to a situation where countries on both sides of the negotiating table continue to raise the price of their goods or impose tariffs to the point where everyone is worse off then they were previously. In the past, tariffs have proven to be a negative political tool for all parties involved. Only time can tell if these tariffs will actually save many of the manufacturing jobs that have been either replaced by automation or have left our shores altogether. One thing is certain however, we can expect products that use primarily aluminum and steel to rise in price due to these tariffs.