Nerves of Steel: New Tariffs Could Raise Costs & Upset Trade Agreements

Categories : Procurement Goals | Set Strategy | Develop Business Requirements | Evaluate Supply Market | Reduce Risk Published on : Mar 15 2018

By: ProcurementIQ Analyst, Roshan Sathyanarayana

On March 8, President Trump announced new tariffs of 25% on steel and 10% on aluminum. With no broad support from Congress, the White House relied on a rarely invoked section of the Trade Expansion Act of 1962, which allows the president to impose tariffs by executive order in the interest of national security.

The imposed tariffs are expected to affect a multitude of industries in the short term. In the long term, it is the reaction to those tariffs from other countries that poses the largest threat to procurement departments. In bypassing Congress and the World Trade Organization, the White House’s actions could spur other countries to retaliate by imposing their own duties on American exports, thereby upsetting a long-standing network of trade agreements that have kept the prices of globally traded goods low for everyone. While the exemption for NAFTA allies will minimize the extent of price shocks related to these new tariffs, procurement professionals should be wary of how purchasing strategies for the products or services they rely on may be affected.

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